Making sense of the surge in CPI rent inflation

It is no secret that strong immigration is pushing up rents but, as rent growth for new tenancies was little changed last year, this does not fully explain the surge in CPI rent inflation. The CPI measure is picking up unusually large rent increases on rent-controlled units when they are re-leased, and the magnitude of the recent rent hikes is probably because many such units were previously leased at the low rents on offer in 2020 and 2021. We expect CPI rent inflation to slow as the average increases on these units declines.