Because of persistently high home costs, Florida is now considered as America’s inflation hotspot.
With a 9% inflation rate for the 12 months ending in April, the Miami-Fort Lauderdale-West Palm Beach area has the highest inflation rate of metro areas with more than 2.5 million residents.
According to the Consumer Price Index, this is more than double the national average of 4%. St. Petersburg-St. For the fiscal year ending in May, the Petersburg-Clearwater metro had the third-highest inflation rate in the country, at 7.3%.
Other metropolitan areas, on the other hand, have made encouraging strides. Minneapolis has the lowest inflation rate of 1.8% year on year in May of the 23 metro regions for which the Labor Department publishes inflation data.
At 2%, urban Hawaii had the second-lowest inflation rate, matching the Federal Reserve’s chosen inflation gauge, the Personal Consumption Expenditures index.
Here are some important inflation patterns for the largest metro areas in the United States, as well as the dynamics behind such moves.
A vexing inflation problem in the Sunshine State
In Florida, rising population has pushed up inflation, particularly in housing expenses. According to economists, this is a tendency that escalated during the epidemic, when remote work allowed several Americans to migrate.
“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.”
Florida’s population grew the most of any state from July 2021 to July 2022 because of domestic migration, according to the Census Bureau’s latest estimates. During that same period, Florida also had the fastest population growth by percentage, the first time it has notched that top spot since 1957.
Housing expenses make for about a third of the Labor Department’s Consumer Price Index, and population growth has a significant impact on that component. A new resident increases demand in a local economy across the board, including transportation, services, and housing. Inflation has risen as a result.
“All of these factors are putting upward pressure on prices in both the rental and purchasing markets,” Phalin added. She went on to say that there aren’t enough suitable rental apartments because “a lot of homes are converting themselves into Airbnbs, and some homeowner associations prohibit people from renting out their homes.”
All of this has resulted in a rising affordability problem for residents who have resided in areas like Miami and Tampa Bay for decades or their whole lives.