Rent Increase by CPI: A Guide for Landlords and Tenants

This article covers using the consumer price index (CPI) to adjust rental rates. You'll learn the basics of CPI, its housing data component, and other data sources landlords can use to determine rent escalations.

Nichole Stohler
Last Updated
June 20, 2024
Rent Increase by CPI: A Guide for Landlords and Tenants

Inflation impacts everyone, tenants and landlords alike. As the cost of living rises, renters feel the pinch of higher prices for living essentials like groceries and utilities. At the same time, landlords deal with increasing property maintenance, repairs, and other operational expenses. This creates challenges when it comes to setting and adjusting leasing rates.

Should landlords benchmark rent increases solely against local market trends, or is there merit in using a standardized approach like the consumer price index (CPI) to account for overall inflation? This article explores the role of CPI in rental housing and how both tenants and property owners can understand rent adjustments tied to this key economic indicator.

We'll cover the basics of the index, its various measures published by the Bureau of Labor Statistics, and how the housing component factors into rent calculations. You'll also learn the pros and cons of using CPI to raise rents, as well as alternative data sources to consider.

Understanding CPI

The consumer price index is the government's key metric for tracking inflation over time. The Bureau of Labor Statistics calculates and publishes it monthly.

To determine CPI, on a monthly basis, the Bureau analyzes a market basket of common goods and services that consumers typically purchase, including:

  • Housing
  • Food
  • Transportation
  • Medical care
  • Education

For the housing component, the Bureau collects data from both rental units and owner-occupied units. For rentals, they simply track the lease rates tenants pay. However, for owned homes, they calculate an "owners' equivalent rent," which estimates what homeowners would pay if they were renting their residences.

By monitoring fluctuations in prices for this basket representing consumer spending, the CPI data reveals whether overall costs are rising or falling for the average consumer.

Using CPI for rental prices

One operational approach to consider is directly tying your rent increases to changes in the CPI. Adjusting your rates based on this key inflation metric can help your rental income keep pace with your own rising property costs over time.

Basing your rent hikes on the CPI's housing survey data involves pros and cons to consider:


  • Predictable adjustments: Tying rent increases to CPI in lease agreements is a systematic way to approach rent escalations. This predictability allows both landlords and tenants to better plan financially based on expected CPI-based hikes.
  • Fairness and transparency: Using CPI as the basis for rent increases adds a layer of fairness and transparency to the process. CPI is an objective, widely recognized inflation metric published by the government.
  • Trust-building: Linking your rent increases directly to official economic data helps build trust and support positive landlord-tenant relationships. Tenants see that the increases aren't random; they follow a third-party measure of inflation that impacts everyone's costs of living.


  • Delay in reflecting current market conditions: One potential drawback with using CPI for rent increases is that it's a pretty broad measure. The issue is that changes in CPI can sometimes lag behind what is happening in local real estate markets. As a result, the rent hikes you implement based on CPI could end up being out of sync with what's actually going on in your market.
  • Administrative burden: If your leases tie rent increases to CPI adjustments, it creates an administrative burden because you have to monitor CPI releases and calculate the increase for each property based on the new data. Handling those tasks across your entire rental portfolio can be an operational hassle.

How to calculate rent increases with CPI

If you're curious about implementing CPI, here's how to use the metric to calculate increases for your rental properties:

Step 1: Calculate the percentage change in CPI

(CPI at Current Date - CPI at Base Period) / CPI at Base Period × 100

Example calculation:

  • CPI at base period: 250
  • CPI at current date: 260
  • Percentage change = (260 - 250) / 250 × 100 = 4%

Step 2: Calculate the rent increase amount

Current Rent × (Percentage Change / 100)

Example calculation:

  • Current rent: $1,000
  • Percentage change: 4%
  • Rent escalation = $1,000 × (4 / 100) = $40

Step 3: Determine the new rent amount

Current Rent + Rent Increase

Example calculation:

  • Current rent: $1,000
  • Rent increase: $40
  • New rent = $1,000 + $40 = $1,040

Other sources for rental rate data

The decision to use the CPI may not be suitable for all landlords and property owners. Regardless of whether you decide to use CPI data, there are several other reports and information sources available to help determine rates, including:

Rent control boards

Many cities with rent control or stabilization laws have rent control boards that publish allowable rent increases. You'll find that the allowable rent hikes often use CPI. For example:

  • Los Angeles' Rent Stabilization Division allows a 4% increase through December 2024.
  • San Francisco's Rent Board has a current allowable increase of 1.7% through February 2025.
  • The New York City Rent Guidelines Board governs annual increases for rent-stabilized apartments. For leases beginning between October 1, 2023 through September 30, 2024, they've set it at 3% for one-year renewals and a weighted increase of 2.75% for the first year, then 3.20% for the second year of two-year leases.

Fair Market Rents (FMR)

If you own Section 8 housing, you'll need to pay attention to Fair Market Rent data published by the U.S. Department of Housing and Urban Development (HUD). This data sets the payment standards for the Housing Choice Voucher Program as well as rent ceilings for programs like HOME.

Even if you're a landlord who is not participating in these programs, the FMR figures can serve as a useful benchmark for general market rates in your area. HUD calculates and releases these amounts annually, taking into account factors like rent data, recent mover costs, and housing conditions for different geographic areas.

New tenant rent index (NTRI)

NTRI is provided by the Bureau of Labor Statistics and the Federal Reserve Bank of Cleveland. It uses the same data as the CPI, but it focuses specifically on rental units that have experienced tenant turnover.

The index assigns rent changes to when they actually happen for those new tenant leases. This allows the NTRI to detect rental market shifts and pricing adjustments more quickly compared to the CPI's methodology.

Zillow Observed Rent Index (ZORI)

Zillow's ZORI measures rental market trends by tracking rent changes for the same properties on Zillow, using a repeat-rent methodology to represent the overall market. You can use this data to analyze broad rental trends and decide if it's a good time to adjust your asking rent.

CoreLogic Single-Family Rent Index (SFRI)

CoreLogic's SFRI provides market data for landlords with single-family rental properties like homes, condos, and townhomes. This index measures changes in rental pricing specifically for these residential units across major metropolitan areas in the U.S.

The SFRI analyzes the same rental properties over time to track true rent changes rather than just looking at overall asking rents.

CoreLogic's data includes 100 major metro areas and provides both national and regional rental pricing trends. So, whether you own properties in Atlanta, Phoenix, or Seattle, the index can help you understand how single-family rents are evolving in your specific market over time.

Realtor associations

These groups publish regular reports on rental market trends, including average prices and vacancy rates. For example, the National Association of Realtors (NAR) produces a quarterly rental report with key metrics and an analysis of the overall rental market. also publishes data on median rent asking and affordability measures for major rental hubs around the U.S.

Managing lease increases

Property management platforms can be valuable tools for landlords to manage lease increases. Solutions like Azibo allow you to centralize all your lease and renewal data, making it easy to identify upcoming expirations that present opportunities to adjust your rates.

Azibo also provides integrated accounting and financial management capabilities. This helps you analyze operational costs across your entire rental portfolio to determine appropriate rent escalations that cover your expenses while still considering local market rates and tenant affordability.

CPI index rent escalations

Using CPI for rent escalation can help landlords account for inflation's impact on operational costs. The potential downside is that CPI may not always perfectly align with the rental pricing reality in your specific neighborhood.

Tenants should review their lease agreements for any CPI adjustment clauses and understand how potential rent hikes get calculated. In addition, establish a solid communication channel between you and your landlord so that any lease raises are done fairly and transparently.

Rather than solely relying on CPI, landlords can benefit from leveraging other data sources that track local rental market trends and pricing. This additional market research helps you make better decisions for your situation. Whichever path you take for implementing increases, proactively communicating rent changes with tenants helps foster and maintain positive relationships.

Rent CPI increase FAQs

What percentage of rent is CPI?

The CPI doesn't directly represent a percentage of rent. It includes owner's equivalent rent (OER) to estimate homeowner rental costs. Landlords use CPI changes to adjust rent for inflation, while the impact on tenants varies by the specific index and lease terms.

What is a CPI increase on leases?

A CPI increase on leases is a method of adjusting rent based on changes in the consumer price index. It allows rent hikes annually according to the percentage change in CPI so that rental income keeps pace with inflation. This method applies to both residential and commercial real estate leases.

Does consumer price index include rent?

Yes, the consumer price index includes rent. The CPI has a housing component that accounts for rental costs. For renters, it directly measures rent payments. For homeowners, it uses owner's equivalent rent to estimate the rent they would pay if they were renting their homes.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of, a blog dedicated to real estate investing.

Other related articles

Rental rundown background image
Rental rundown hero image

Whether you’re a property owner, renter, property manager, or real estate agent, gain valuable insights, advice, and updates by joining our newsletter.

Subscriber Identity

I am a

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.