Inflation has not been an economic problem in the United States since the start of The Great Recession. Despite this, pockets of sharp increases in inflation have developed in several cities around the country. In some, the rate of inflation was three times 2010’s national average of 1.75%. 24/7 Wall St. has identified the ten cities with highest inflation and found several common causes for the high inflation.
The primary reasons for high inflation in some of the cities are improvements in unemployment rates and substantial population increases. Unlike the rest of the nation, in those cities more people have entered the workforce. This has allowed more residents to put the additional disposable income back into the economy. Population growth has also increased consumer demand in these same cities.
Using a report produced by Moody’s Analytics, 24/7 Wall St. identified the ten cities with the highest inflation rates for 2010. To illustrate the impact inflation can have on local economies, we examined changes in consumer prices, home vacancy rates, unemployment, population change, and median income for the nations 395 metropolitan statistical areas. Data for home vacancies, population, and median income came from the Census Bureau. Unemployment data is from the Bureau of Labor Statistics. For each of these statistics, we also looked at the change from 2009 to 2010. We found that in eight of the cities with the highest inflation, there was also an improvement in the jobless rate. Population grew in nine.
Housing vacancy was examined by city because it is considered to be the most important component of inflation. As a rule vacancy rates should decrease in markets experiencing inflation. However in the cities with the highest inflation, there was little correlation between the two. Vacancy rates fell in only in half of the cities 24/7 examined. There is no ready explanation for this. It may be that an increase in foreclosures or residents abandoning their homes could increase the vacancy rate, despite the high inflaiton. Home values have dropped by more than half in several of the cities, and by much more than that in parts of California, Nevada, and Florida.
This is 24/7 Wall St.’s Ten Cities With The Highest Inflation.