Inflation Is Hitting Renters Particularly Hard

Inflation Pain

Inflation has been affecting Americans across the board over the past years, but some groups have been hit worse than others.

Today, this disparity is especially evident when it comes to renters compared to homeowners, with renters feeling the pressure of higher prices much more on average.

Housing Costs and Inflation

Last week’s consumer price inflation data showed that prices rose at a faster pace again in December, according to data from the Bureau of Labor Statistics. This was in large part due to higher housing costs. The shelter index read 6.2% year-over-year in December, accounting for about two-thirds of the inflation measures increase when stripping out food and energy costs.

As of November, rent costs have risen more than 20% compared to pre-pandemic times, according to Realtor.com, even though rents have begun to trend down in recent months.

Economic Inequality

Comparing renters and homeowners also gives way to other differences. For example, homeowners tend to have higher incomes than renters. High inflation has a tendency to hit lower-income households, who have less flexibility to downgrade to cheaper products, harder. On top of that, shelter costs tend to make up a higher percentage of spending for lower-income earners, making rent inflation a double whammy for certain households.

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