Weekly Market Recap – May 18, 2026

While all eyes were on the impact of the U.S./Iran war on energy prices in the April CPI report, one area that grabbed investors’ attention was the sharp rise in shelter inflation. Although shelter inflation was up a modest 3.3% y/y, it rose 0.6%m/m– double the 0.3%m/m increase from the March CPI print. However, this increase was not due to suddenly rising rents, but rather a mechanical adjustment stemming from the government shutdown last fall. During that period, the BLS was unable to gather data for October and instead used a carry-forward method, assuming no change in shelter costs from the previous panel survey date of April 2025. Since the BLS calculates changes in shelter costs using the percentage change over the previous six months from six rotating panels, every CPI report since October has missed a month of shelter cost inflation. The understatement was not corrected until the panel was surveyed again in April 2026.