Services inflation is a wage story with a shelter lag

The practical implication is that the disinflation already in the pipeline is larger than the current print suggests, and positioning built on the headline is positioned for a number that mechanically has to fall. Shelter enters the index with a long lag because it is measured from a rolling sample of leases rather than from new-lease pricing. New-lease data has been decelerating for several quarters and the index has not yet reflected it. The rest of services tracks wages, and wage growth has been decelerating on every measure that is not the headline average, which is distorted by composition effects.