Prices consumers pay for goods and services were up more than 2.5% compared to the same time a year ago, and up 0.2% from the month before, according to the most recent consumer price index from the Labor Department.

Over half of that monthly increase was thanks to the cost of shelter. In fact, shelter costs are up almost 5% over the last 12 months. And while that may sound like a big increase, it’s worth pointing out that rent inflation has actually been slowing down for more than a year and a half now.

The thing about the CPI report, and the way it tallies up shelter costs, is that it tends to reflect leases that were signed a while ago.

Michael Pugliese, a senior economist at Wells Fargo, said private sector data shows that today’s rents have slowed down even further.

“Look at, say, the Zillow indicators as just an example. Year over year, they’re about what they were pre-pandemic. 3, 4, 5%,” he said.

Pugliese said the slowdown in rent inflation reflects the cooling in the broader economy. There’s less turnover in the labor market than a year ago, and earnings growth has come down.

“And it makes sense that that would then, over time, be reflected in, you’re not going to sustain these 10% or even higher rent numbers that you were seeing a couple years ago,” Pugliese said.

Rent growth is still up quite a bit in the Northeast and the Midwest. But in Southern states, including North Carolina and Tennessee, rents have eased up a lot.

Daryl Fairweather, chief economist at Redfin, said that’s because of new supply coming online.

“Especially of zero- to one-bedroom units. So that’s bringing down the national rent figure, because there are considerable rent cuts going on in some of those Southern metros,” she said.

Fairweather said more rental units are hitting the market next year, which should cause rent inflation to slow further.

But new construction projects have been slowing down, thanks in large part to elevated interest rates.

Odeta Kushi, deputy chief economist at First American Financial Corp., said if that continues, “then after this current batch of completed and under-construction apartments come to market, there won’t be a lot left to deliver, say, in 2026.”

Especially if the Federal Reserve has any reason to keep interest rates higher for longer.