Housing cost increases have settled back down to pre-pandemic levels, providing some hope that inflation could slow this year despite surging costs for food, energy, and other necessities.

Wednesday's report on the Consumer Price Index in January showed overall prices increasing faster than expected, but there was one silver lining. Rents only rose 0.3%, down from 0.4% the month before, and Owner's Equivalent Rent, a measure that tracks housing costs for homeowners, rose 0.3%, the same as in December. Both of those me🎶asures were hovering on the high range of pre-pandemic levels, after having surged in late 2021 through 2023.

Housing costs are the biggest line item in most household budget💖s, and are also the biggest part of inflation measures such as the CPI. So, rent increases simmering down is good news for household budgets as well as the broader economy.

The overall surge of the CPI in January partly reflected rising prices for used cars as well as an increase in the "shelter" category, which includes prices for homeowner's insurance and hotels.

There is still plenty of reason to be pessimistic about the inflation outlook, including the fact that President Donald Trump's wide-ranging tariffs on foreign trade could push up prices when they are implemented. However, lower rent inflation could ease some of the financial pain.

"It looks a potentially encouraging story for housing CPI to come in lower from late summer, which can act as an important counterweight to concerns over tariffs," James Knightley, chief international economist at ING, wrote in a commentary.