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A 3 percent inflation increase would work out at $23.25, 2 percent is $15.50. I've read in lardlording books that tenants don't like round figure increases, apparently feeling they're just made up. Inflation percentages show you what's going on in real terms and seem to go down better, even if they're higher! If you think an increase will cause the tenant to leave, you have to think how much it will cost to turn the unit around, advertise, and include losses when vacant. You should also look at what similar properties in that area are renting for. If the market is flat or declining, you may want to keep the rent the same. You'll want a good tenant on an annual lease.
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