Rising rents fuel inflation, adding to Fed’s trouble

Economic policymakers have said inflation will prove temporary, but rising rents keep challenging that view and pressuring Washington to react.

Work stoppages, supply shortages, and labor constraints due to the pandemic have kept developers from ramping up home building to meet the existing demand level.

The Federal Reserve targets 2 percent annual price increases on average, so it was a shock when home rents increased a whopping 10 percent this year as rents shoot higher after a brief pandemic slump, burdening households and fueling overall inflation.

That is bad news for the Federal Reserve, because it could make today’s uncomfortably rapid price gains last longer. It’s also problematic for the White House because it hits households in their pocketbooks, diminishing well-being and upsetting voters.