A new study has revealed the top five US cities most affected by inflation, as well as the top five where prices are rising less quickly.
According to a recent survey by WalletHub, the cities of Dallas, Detroit, Honolulu, San Francisco and Seattle are among those where residents are feeling the effects of inflation the most.
The findings of this study are: Key inflation indicators within 23 major metropolitan statistical areas, linked to current data, two-month old data, and one-year old data. Consumer Price Index.
Nationwide inflation reached 3.3% year-on-year in May, but prices rose even sharper in some cities.
According to WalletHub’s research, inflation rates all increased in Detroit (3.5%), San Francisco (3.8%), Seattle (4.4%), Dallas (5.0%) and Honolulu (5.2%).
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Meanwhile, some cities have barely felt the effects of inflation, recording increases between 1.8% and 3.2%. These cities include San Diego, Atlanta, Denver, Minneapolis and Tampa.
Dallas has suffered especially high inflation, due in part to a housing shortage that is driving up rent and mortgage costs, said Dean Stansell, a research economist at Southern Methodist University. CBS Money Watch.
An influx of 150,000 new residents between July 2022 and July 2023 is expected to outpace the pace of new home construction, making the housing market more competitive.
“Government restrictions on new home construction are making it difficult for supply to keep up with demand,” Stansell said. “The housing shortage is driving prices higher than they should be.”
Raising the minimum wage The resulting rising labor costs for local businesses are another factor that makes cities like Seattle particularly hard hit by inflation.
“These higher labor costs translate into higher prices for output for businesses that employ minimum wage workers, such as fast food restaurants and grocery stores,” Stansell said.
“The rising cost of inexpensive food products is especially burdensome for low-income earners who are struggling to make ends meet.”
The Federal Reserve decided to keep its key interest rate unchanged after the latest CPI data was released, signalling a more cautious approach to rate cuts.
While they expect one rate cut this year, the Fed has not said when that might happen.
The data also showed that prices of airfares, furniture, clothing, new cars, energy and entertainment fell in May, helping to keep inflation in check.
However, housing costs increased by more than 0.4%, marking the fourth consecutive month of increases.
Prices that increased included health care costs, used cars and trucks, education costs and a slight increase in the cost of eating out.
Economists say the two biggest obstacles to lowering inflation are housing and fuel costs.
“As these price effects converge across different markets, inflation in these regions is expected to eventually decline, but it is taking longer than many initially expected,” Lindenwood University economist Grant Black said in the WalletHub survey.
“As these price effects converge across different markets, inflation in these regions is expected to eventually decline, but it is taking longer than many initially expected,” Lindenwood University economist Grant Black said in the WalletHub survey.
“Thankfully, recent inflation data shows that food and fuel prices are starting to slowly fall, which is a positive for consumer budgets.”