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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Jon Koplik who wrote (7371)	6/14/2006 1:29:27 PM
From: Jon Koplik	Read Replies (1) of 33421

The core was driven higher by a huge 0.6% jump in owners' equivalent rent, the biggest increase in 16 years. OER is being pushed up by a combination of falling rental vacancy rates and increased demand for rentals as rising short rates price people out of the home buying market. OER is also probably being pushed up by a technical quirk; it rises relative to primary rents when utility costs slow -- they have fallen for four straight months. Ex-OER, core CPI rose only 0.1%. The story is one of a relative increase in rents; monetary policy is the wrong tool to deal with this. Still, a June 29 hike is a done deal. We just hope sense will prevail in August; a clear slowdown should help. June 14, 2006 --Ian Shepherdson, High Frequency Economics ----------------------------------------------------- Anyone have some insight into this "it [owners' equivalent rent] rises relative to primary rents when utility costs slow" - business ? Jon.

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