What Advertised Rents Have to Do With the Rent in the Inflation Numbers

Renting has become significantly more expensive in Canada in recent years. The Bank of Canada's account of the surge starts with demand growing faster than supply, which pushed up asking rents — the prices advertised for vacant units.

The interesting part is how those advertised prices reach the figure that shows up in inflation. Asking rents and the average rents captured in the consumer price index are different measures, and the link between them runs through leases: as tenants move and sign new ones, changes in asking rents spread gradually into the CPI average.

Call it a slow conduit. A run-up in advertised rents enters the index only as units turn over, so the timing depends on how often tenants move rather than on how abruptly prices moved. Read that way, an asking-rent number is less a forecast than a description of the pressure waiting at the door of the next lease.