Housing makes up the largest chunk of CPI, and that measurement, known as shelter inflation, is expected to cool this year and might even go negative next year, according to the researchers. Monthly shelter costs were up 0.4% in July, and up 7.7% from a year ago. After steadily increasing, year-over-year shelter inflation has moved down for four consecutive months, from 8.2% in March to 7.7% in July.
That suggests that the housing market has slowed significantly, along with the rise in interest rates. Housing represents about 30% of the value of the basket of goods that the Bureau of Labor Statistics evaluates to put together the Consumer Price Index. For renters, shelter inflation includes rent and utility payments. For homeowners, the BLS looks at what it would cost to rent a similar house. Inflation in other parts of the economy also contribute to inflation.