I recently got the question, Why does the CPI exclude rent? So I'm answering that here. The Consumer Price index doesn’t exclude rent. It actually has an entire section entitled “Shelter”. But not everyone rents... some people actually own their own homes. So to cover everyone they created a sort of hybrid rent/ownership component to the CPI called “owner’s equivalent rent”. According to the Bureau of Labor Statistics who calculate the CPI, “The expenditure weight in the CPI market basket for Owners’ Equivalent Rent of primary residence (OER) is based on the following question that the Consumer Expenditure Survey asks of consumers who own their primary residence: “If someone were to … [Read more...]