Here’s why annual Phoenix inflation rate hit its highest point in nearly 3 years

Skyrocketing fuel prices have pushed the metro Phoenix inflation rate to its highest level in nearly three years.

Valley prices were 3% higher in April than they were a year ago, according to data released Tuesday in the U.S. Bureau of Labor Statistics’ Consumer Price Index.

While that was a leap from the area’s annual inflation rate of 1.7% from February, it was below the April national figure of 3.8%.

Annual Valley inflation was last above 3% in August 2023, at the tail end of a COVID-era surge into double-digit rates.

Arizona economist Jim Rounds, president of the Rounds Consulting Group, noted that prices never came down after the pandemic spike.

“We’ve talked about inflation before, about how we had 12, 13% at one time, but we never had inflation go below zero. So, even though we were enjoying the 2, 2½% for a while, it was still getting added to those previously high prices,” Rounds told KTAR News 92.3 FM’s Arizona’s Morning News on Wednesday.

Phoenix inflation surge coincides with Iran war

The new Consumer Price Index report also showed a 1.7% rise for metro Phoenix inflation over the last two months, a span that largely aligns with the ongoing war in Iran. Fuel prices have soared during the war while cargo ships are blocked from passing through the Strait of Hormuz, a vital corridor for global oil supplies.

Rounds said the cost of fuel ends up inflating prices in other sectors of the economy. That dynamic can be seen in the Consumer Price Index data. When food and energy are removed from the equation, the annual metro Phoenix inflation rate for April was 1.7%, the same as it was in February.

“Think about whenever you go to the grocery store, the food had to get there somehow. And they get there on trucks, usually during the evening, which means the fuel prices are going to be added to the cost of the product, regardless of what it is,” he said.

The Associated Press contributed to this report.

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