CPI Without Owner’s Equivalent Rent Has Been at Fed Target for a Year

Photo: Federal Reserve.

That’s a bit of an exaggeration, but the Consumer Price Index (CPI), excluding owners’ equivalent rent (OER) fell to 1.4 percent in June 2023 and has remained pretty close, but mostly above 2.0 percent ever since. We all know the Fed targets the Personal Consumption Expenditure Deflator, where the OER has a smaller weight, but it is still worth seeing how much this one category affects the CPI.

OER is not just a major expenditure category, it is also unusual in the sense that literally no one pays it.