Shelter Inflation: Predictions of Slowing and Possible Negative Turn in 2024

Forecasting models combining various market indicators suggest that shelter inflation, which has remained high even as other components of inflation have fallen, is likely to slow significantly over the next 18 months. The slowdown in the housing market, including house prices and rents, due to rising interest rates is expected to have an impact on future shelter inflation. However, there is uncertainty surrounding these forecasts, and the relationship between asking rents and shelter inflation is complex. The Federal Reserve aims to reduce overall inflation, and if shelter inflation persists at current high levels, it could pose challenges in achieving this goal.