New statistics from the Bureau of Labor Statistics [1] (BLS) found that October’s inflation rate fell to 7.7%, well above “normal” levels, but that is an average and some cities saw inflation nearly double October’s average.
According to a new report from Redfin [2], the four metropolitan areas with the highest inflation rates in the third quarter were the pandemic-era migration hotspots of Atlanta, Miami, Phoenix, and Tampa, Florida.
For example, in Phoenix, key indicators of inflation, namely the price of goods and services, rose 13% year-over-year, the highest inflation rate among large metropolitan areas tracked by the BLS. Phoenix was also the sixth-most popular destination for migrants as tracked by Redfin user data.
Phoenix was followed by Atlanta, which had an inflation rate of 11.7%; Tampa, 10.9%; and Miami, 10.7%.
However, these inflation rates were outliers; other major cities such as San Francisco reported that inflation rose at a rate of 5.7% in October, half the rate of Phoenix.
Redfin stated that inflation and migration have become increasingly linked according to recent data. The pandemic necessity of remote work enabled more Americans to pick up and move, mainly to the Sun Belt, which is why these migration hotspots are seeing higher than average inflation rates.
“The pandemic triggered a great rebalancing of affordability,” said Taylor Marr [3], Redfin’s Deputy Chief Economist. “Americans left pricey coastal job centers and moved to more affordable places in the Sun Belt, but now those more affordable places are seeing affordability erode faster than anywhere else in the country. Some of these areas may lose their titles as top migration destinations in 2023 as a result.”
The data also shows that the increase in housing costs is a bigger contributor to inflation in migrants destinations than where they moved from.
In Phoenix, for instance, shelter costs rose 19% year over year in August, one of the top inflation drivers. That compares with Phoenix’s overall inflation rate of 13%. Food was also a major contributor to inflation, with prices up 14.1%.
By comparison, San Francisco only saw shelter costs increase 2.1% year over year, one of the smallest inflation drivers. Fuel, transportation and food were much bigger contributors to the region’s overall inflation rate, which was 5.7%. Redfin plans to update these figures through October on Thursday, Nov. 10, when the BLS is scheduled to release its latest data.
Click here [4] to view the report in its entirety.