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These cities are hit hardest by inflation: report

WWLP Springfield logo WWLP Springfield 8/14/2022 Alix Martichoux, Nexstar Media Wire
These cities are hit hardest by inflation: report © Provided by WWLP Springfield These cities are hit hardest by inflation: report

(NEXSTAR) – Inflation has been putting a strain on U.S. households for two years strong, and everyone has been feeling it to some extent. But some cities have been hit harder than others, according to a recent analysis by WalletHub.

WalletHub compared changes in the Consumer Price Index, a statistic from the Bureau of Labor Statistics that measures the cost of a mix of goods like groceries, gas and services, in 23 metro areas.

The analysis found things were worst in Anchorage, Alaska – and by a lot. Over the past year, the CPI has jumped up more than 12%, WalletHub found.

No region seems spared by the ranking. Cities in the West, South, Midwest and East Coast were all among the top 10. (See the full ranking below.)

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You may think inflation hits expensive states hardest, but that’s not the case, according to think tank Economic Innovation Group. Prices in lower-cost states have risen the most, the group found. For example, Hawaii – where the cost of living has long been high – has seem some of the lowest impacts inflation.

“Many of today's inflation hotspots were actually becoming more affordable relative to the country until the Covid-19 pandemic hit. This pattern might be giving those who live in these states a sense of whiplash,” the Economic Innovation Group.

What explains the difference? Many of the historically cheap states are “home to industries disproportionately affected by price increases, such as manufacturing,” the group explains. “Some are rural, where gasoline and other hard commodities feature strongly in the local household and business spending baskets. Some states have also seen rapid population increases drive up housing costs, especially in the Mountain West.”

High-cost states like Hawaii, California and New York have economies that rely more on the service sector, which have been slower to recover from COVID-related economic shutdowns, and haven’t seen the boom of returning to business (and resulting inflation) as a result.

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See below for more on how the 23 cities compare when it comes to inflation:

There are early signs this week that inflation could finally be easing up. A report from the Labor Department Thursday showed that the producer price index - which measures inflation before it reaches consumers - declined 0.5% in July. It was the first monthly drop since April 2020 and was down from a sharp 1% increase from May to June.

The easing of wholesale inflation suggests that consumers could get some relief from relentless inflation in the coming months. The wholesale report follows government data Wednesday that showed that consumer inflation was unchanged from June to July - the first flat figure after 25 straight months of increases.

Yet economists caution that it’s still too early to say that inflation is headed steadily lower.

"The July deceleration … is a move in the right direction," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "But producer costs continue to rise at a rapid pace, well above target.”

The Associated Press contributed to this report.

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