Oregon Sets Maximum 2022 Rent Increase at 9.9%

by Josh Lehner, Economist
Oregon Office of Economic Analysis

I know some of you may be scratching your heads given inflation is currently running hot and the recent deep dive into the outlook for inflation. The reason why next year’s maximum allowable rent increase is relatively tame comes down to fact the law uses as 12 month moving average. Specifically see ORS 90.323 (2) where it reads, in part, “the annual 12-month average change in the Consumer Price Index for All Urban Consumers, West Region (All Items).” Currently the economy is experiencing a rapid increase in inflation, but it takes some time for that to feed into a 12 month average. The current calculation includes some weak months along with the strong inflation readings in the past handful of months. Combined, they result in inflation of 2.9%, making the maximum allowable rent increase in 2022 9.9%.

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As such, this also means that the current bout of inflation will mostly be reflected in the 2023 maximum allowable rent increase which our office will announce a year from now. This will be the case even if underlying inflation slows further in the months ahead. This is simply due to the difference between noisy monthly data and a more stable 12 month average. As a stylized example, you can see this difference in the chart below. The hypothetical scenario here has inflation slowing to a 2% annual pace (the Fed’s target) starting next month. You can see that a year from now the single month inflation readings would be back down, but the trailing 12 month average will still be elevated. This means 2023’s maximum allowable rent increase will higher than this year’s.

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See more including a downloadable spreadsheet with all the data