Phoenix, US Sun Belt See Inflation Rate Ease Below 2%
(Bloomberg) -- Phoenix and Atlanta, once inflation hotspots, are now seeing prices rise at the slowest rate among big US cities.
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Prices in Arizona’s biggest metro increased 1.6% in October from a year earlier, a major slowdown from a peak pace of 13% in August 2022. In Atlanta, where the rate went as high as at 11.7% two years ago, prices rose 1.9% in last month, according to the Bureau of Labor Statistics.
The two metro areas exemplify the disconnect between data and public sentiment about the economy, a crucial issue for voters in the US presidential election won last week by Donald Trump. While the rate of inflation is now below the Federal Reserve’s 2% target in both cities, costs of living — particularly rents — remain far higher than before the pandemic.
Rents and home prices, which soared during the pandemic-recovery era especially in Sun Belt states, are finally moderating across the region and are behind much of the inflation improvement.
Shelter costs in the Phoenix metropolitan area, for example, climbed 2.4% in October from a year earlier, about half the US average. However, housing costs remain 44% higher than they were in prepandemic October 2019, compared with a 26% climb nationwide during that period. Shelter costs in Atlanta rose 3.4% on a year-over-year basis last month, but remain 36% higher than five years ago.
Phoenix has also seen a 26% drop in motor fuel costs, helping temper inflation in the desert city.
While inflation has ebbed in Southern cities, price growth has picked up in large coastal metros that weren’t hit as hard two years ago. The inflation rate in the New York metro area climbed back to 4%, and prices in Los Angeles rose 3% from a year ago. Nationwide, prices were up 2.6% on an annual basis, the first year-over-year increase since March.
The federal government tracks prices in 23 metro areas, with New York, Los Angeles and Chicago reporting every month and the other cities alternating every other month.
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