FINANCE
Which US cities are the best and worst affected by inflation?
National inflation has been higher than expected in 2024, driven by persistent increases in costs for essential goods and services.
National inflation has been higher than expected in 2024, driven by persistent increases in costs for essential goods and services. With the year-over-year inflation rate at 3% in June 2024, the Federal Reserve has been reluctant to lower its benchmark interest rates, a move that was expected at the turn of the year.
To understand how inflation is impacting people in different cities, WalletHub compared 23 major Metropolitan Statistical Areas (MSAs) using the Consumer Price Index (CPI). They looked at the data for the latest month available, two months prior, and one year prior to capture both short-term and long-term changes in inflation.
Cities with biggest inflation problem
- Dallas, TX
- Honolulu, HI
- New York-Newark-Jersey City, NY
- Detroit, MI
- Riverside, CA and Boston, MA
All of the cities above have inflation rates at least 4% higher than the same time last year. Honolulu and Dallas have been particularly badly affected, with prices increasing by 5% or more in the same period.
Cities with smallest inflation problem
- Houston, TX
- Tampa, FL
- Miami, FL
- San Francisco, CA and Los Angeles, CA
Major factors influencing inflation rates
Wallethub noted the continuing war in Ukraine as well as a tight labor market as primary reasons for inflation. Other experts had their say too.
What is a tight labor market?
A "tight labor market" refers to a situation where there are more job openings than there are unemployed workers available to fill them. This condition typically arises when the economy is near full employment, making it difficult for employers to find and hire workers.
“The main factors driving current inflation are the same factors that have been driving inflation over the last three years,” said Maximillian Littlejohn, Assistant Professor of Economics, Else School of Management.
Kailash Khandke, Professor of Economics at Furman University, blames inflation on demand for housing and persistently high grocery prices. Indeed, shelter services are up 5.4% year on year.
“When you couple these factors with external shocks, such as the Israel-Gaza, and Russia-Ukraine conflicts, these have contributed to high energy, gasoline, and oil prices,” he said.