ECONOMY
Why is inflation so high in Florida? The reason behind rising prices in the sunshine state
Latest national inflation data show the lowest value in years, but the same cannot be said of Florida. Why is this the case?
Inflation in the US is on the way down. Perhaps as a response to the Federal Reserve’s brutal interest rate hikes that have been killing purchasing power and getting many workers sacked, the Consumer Price Index measuring inflation is tumbling oown.
Core inflation, which doesn’t include the oft volatile food and energy prices, was 0.2 percent last month, the smallest single month increase since August 2021. Year-on-year inflation in 3%, rapidly closing in on the Federal Reserve’s target of 2%.
Good news for everyone right? Well, not if you are living in Florida. The sunshine state is yet to feel the benefit of lowering inflation with many areas still at levels that were seen in the peaks of summer 2022.
The Miami-Fort Lauderdale-West Palm Beach area has the highest inflation rate of large city areas with a 9% inflation rate for the 12 months ended in April. This is now three times the national average. Other areas such as Tampa pay have rates over 7%.
What is behind these particularly high inflation areas?
Housing costs have been the key metric. Florida has seen its population grow a lot over the last year increasing 2%, much higher than the overall US rate of 0.1%. All these people need to pay for homes.
“A lot of people are still coming to Florida because the economy is really strong, and many like the fact that we don’t have an income tax like in New York, for example,” said Amanda Phalin, an economist at the University of Florida.
“And in places like Miami, we’re seeing a lot of real estate demand from non-Floridians or non-American investors — generally wealthy folks who want to have a nice home here,” she continued.
House prices in the state rose by 8% to the year in May with areas like Miami experiencing 17% price increases.