William Simpson
Dallas, Detroit, Honolulu, San Francisco and Seattle are distinctly different North American cities, but with one thing in common: their residents have been hit hardest by inflation.
This is in accordance with a to study from WalletHub, which compared key inflation metrics across 23 major metropolitan statistical areas in connection with the latest Consumer Price Index Data, as well as CPI data from two months ago and one year ago. The findings suggest that inflation is affecting certain cities more than others, further stretching Americans’ budgets in certain parts of the US.
Inflation rose 3.3% nationally in May compared to the previous year but it rose even more in Detroit at 3.5% a year ago, San Francisco at 3.8%, Seattle at 4.4%, Dallas at 5% and Honolulu at 5.2%, the WalletHub study shows. In contrast, the impact of inflation in San Diego, Atlanta, Denver, Minneapolis and Tampa has been much less extreme in some cases, with those cities seeing increases of between 1.8% and 3.2%.
Inflation in Dallas is particularly intense because of a housing shortage that is driving up the cost of shelter, a local economist said. The Dallas-Fort Worth area saw an influx of 150,000 residents between July 2022 and July 2023 and these new residents did not find adequate housing, said Dean Stansel, a research economist at Southern Methodist University in Dallas.
“Government restrictions on new housing construction are making it difficult for supply to keep up with demand,” Stansel told CBS MoneyWatch. “This housing shortage is driving prices higher than they would otherwise be.”
Other cities like Seattle are likely still struggling with inflation due to minimum wage increases that have increased labor costs for local businesses, Stansel said.
“These higher labor costs lead to higher prices for production for companies that use minimum wage labor, such as fast-food restaurants and grocery stores,” Stansel said. “These higher prices for cheap food are particularly burdensome for those on low incomes who struggle to make ends meet.”
CPI data released this week put pressure on the Federal Reserve keep your benchmark interest rate unchanged and schedule just one rate cut for this year. The Fed has not disclosed when this rate cut will happen.
Within the data, the prices of airline tickets, furniture, clothing, new vehicles, energy and recreation fell in May, helping to contain inflation, but housing costs increased for the fourth month in a row, rising 0.4%. Health care, used cars and trucks, education costs and eating out also increased. Economists say housing and fuel costs are the two biggest anchors keeping inflation from reaching the levels the Fed wants to see.
“The expectation is that inflation in these areas will eventually fall as these price effects run their course in different markets, but this is taking longer than many initially predicted,” said Grant Black, an economist at Lindenwood University, in the WalletHub study. “Fortunately, recent inflation data shows that food and fuel prices have started to decline modestly, which is a boon for consumer budgets.”
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