Phoenix Inflation at Record 13% Shows Divergence Among Cities

Michael Sasso and Alex Tanzi
·2 min read
130

(Bloomberg) -- Inflation soared to 13% in Phoenix last month, a record for any US city in data going back 20 years and more than twice as high as San Francisco.

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Other cities across the South and Southwest saw double-digit increases in consumer prices, with the Atlanta metropolitan area posting annual inflation of 11.7% and Miami reaching 10.7%, according to Bureau of Labor Statistics data.

Overall inflation was resurgent in August, dashing hopes of a nascent slowdown even as gasoline prices declined. But the national average of 8.3% masks growing disparities among cities, making the Federal Reserve’s fight against inflation more complicated.

In San Francisco, consumer prices rose 5.7% in the 12 months through August, while in Los Angeles the rate was 7.6%. In the New York city metro area, prices rose 6.6%, a slight acceleration from 6.5% in July.

Meanwhile, high housing costs are dogging the Sun Belt, where a shortage of apartments and houses and an inflow of investors have been driving up rents. Shelter costs in metropolitan Phoenix climbed 19% in August from the previous year, compared with a 6.2% gain nationwide.

The price surge in Phoenix and Atlanta, Arizona and Georgia’s biggest cities, respectively, coincide with two contested US Senate races at the midterm elections in about eight weeks.

Recent polls from Emerson College show Democratic Arizona US Senator Mark Kelly in a tight race against Republican Blake Masters. Likewise, an Emerson poll last month showed Democratic incumbent Georgia US Senator Raphael Warnock in a dead heat with Republican Herschel Walker. Both polls showed the economy as the prevailing issue among voters.

There’s probably still more room for housing costs to increase, because rents are typically a lagging indicator. They go up when tenants renew their leases or move to a new place, and many haven’t yet experienced the spike in market prices that started last year.

While Phoenix motorists have benefited from cheaper gasoline, prices there haven’t fallen as fast as in other parts of the country. Motor fuel costs in the city were up 33.5% last month, compared with 26.2% nationwide.

The government tracks local prices in 23 metro areas, with New York, Los Angeles and Chicago reporting inflation every month and the other cities doing so every second month. Among cities that reported prices for July, Tampa, Florida, led with an 11.2% gain.

(Adds context in midterms in seventh and eighth paragraphs.)

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