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To: pater tenebrarum who wrote (18978)	9/16/2000 1:18:34 AM
From: XBrit	Read Replies (3) \| Respond to of 436258

Caroline Baum today takes another swipe at the BLS over the housing component of CPI. If I calculate right, she's stating that the lies about housing costs are causing the current inflation rate to be understated by about 0.8% (4 percentage points omitted from 20% of the index). It's amazing to me that this stuff does not get more discussion in the mainstream financial media: Thank goodness for the tame behavior of owner's equivalent rent! OER, you will recall, is the imputed rental value of a home and accounts for 20 percent of the CPI. It is derived from a survey of residential rents, which makes up 7 percent of the index. Residential rents are up 3.5 percent in the past year. OER is up 2.8 percent, well below the 3.4 percent annual increase in the CPI. The Bureau of Labor Statistics is not attempting to measure home prices in the CPI. But any equivalency measure should bear some relationship to reality. Housing prices rose 6.8 percent in the second quarter from a year earlier, according to an index of repeat sales compiled by the Office of Federal Housing Enterprise Oversight, a regulator of Fannie Mae and Freddie Mac. That's the biggest increase in 12 years. quote.bloomberg.com