Prarthana Magon, Undergraduate Research Assistant
Phoenix inflation is also below comparison metropolitan areas
The Consumer Price Index for All Urban Consumers (CPI-U), often referred to as CPI, serves as an economic indicator that measures the change in prices paid by consumers for goods and services. This index, maintained by the U.S. Bureau of Labor Statistics, offers insights into the fluctuations in the cost of living. To provide a regional perspective on the inflation areas across the U.S., data is presented for selected metropolitan areas in each region of the nation. Consumer price indexes for many other metropolitan areas are available from the U.S. Bureau of Labor Statistics.
The Consumer Price Index for All Urban Consumers (CPI-U) for all items provides an overview of the general cost of living, encompassing a range of goods and services. In December 2023, the year-over-year increase in the Consumer Price Index for all items in the Phoenix MSA stood at 2.7% (Exhibit 1), reflecting an inflation rate which was below the U.S. City Average of 3.4%. Notably, Phoenix experienced the lowest inflation rate among the tracked MSAs. Conversely, Miami-Fort Lauderdale-West Palm Beach, FL, recorded the highest inflation among the tracked MSAs at 5.7%, indicating a significant rise in the cost of goods and services in that region.
Exhibit 1: All Items Consumer Price Index for All Urban Consumers in December 2023
The CPI-U for all items less food and energy gets considerable attention as a measure of underlying core inflation since it is not subject to the volatile movements of food and energy prices. In December, Phoenix's inflation rate for all items less food and energy was recorded at 2.8% year over year. As Exhibit 2 shows this was the lowest among all tracked MSAs. The U.S. City Average for all items less food and energy inflation rate stood at 3.9% year over year. Among the tracked MSAs, the Miami-Fort Lauderdale-West Palm Beach MSA experienced the highest inflation, reaching 6.2% year over year.
Exhibit 2: All Items Less Food and Energy Consumer Price Index for All Urban Consumers in December 2023
The CPI-U for commodities is a sub-index of the all-items CPI-U, measuring the change in prices for tangible items such as fuel, food, appliances, furniture, vehicles, etc. In December 2023, the data indicate that the Phoenix MSA displayed the lowest rate among major metropolitan areas, experiencing a decrease of -0.9% year over year. In contrast, the national commodities inflation rate came in at 0.8% year over year. Notably, the Miami-Fort Lauderdale-West Palm Beach MSA experienced the highest relative commodities inflation, exceeding the national average at 2.3% year over year (Exhibit 3).
Exhibit 3: Commodities Consumer Price Index for All Urban Consumers in December 2023
In contrast to CPIU Commodities, the services index tracks changes in prices for intangible items such as healthcare, housing, education, transportation, etc., reflecting the overall cost movement within this sector. The Phoenix MSA recorded a rate of 4.8% for services inflation in December, slightly below the national average of 5.0%, as shown in Exhibit 4. The Miami-Fort Lauderdale-West Palm Beach MSA stood out with the highest service inflation among the tracked MSAs at 7.1%, while the New York-Newark-Jersey City MSA had the lowest at 3.8%.
Exhibit 4: Services Consumer Price Index for All Urban Consumers in December 2023
The shelter CPI-U index tracks the monthly change in the cost of housing services for both homeowners and renters (and short-term rentals like hotels). It is important to note that shelter is a major component of the CPI and is included in the services index. In December, the Phoenix MSA reported a shelter inflation rate of 4.1% year over year, which was below the U.S. City Average at 6.2% year over year. Notably, the Phoenix MSA reported the lowest increase among the tracked MSAs (Exhibit 5). On the other hand, Miami-Fort Lauderdale-West Palm Beach MSA stood out with the highest increase among the MSAs, coming in at 8.5% year over year.
Exhibit 5: Shelter Consumer Price Index for All Urban Consumers in December 2023
