ARIZONA NEWS

Annual metro Phoenix inflation rate drops back in line with rest of US

Sep 15, 2023, 4:35 AM | Updated: 6:11 am

PHOENIX – Valley inflation, which skyrocketed last year, has slowed to the point where it’s level with the national annual rate, according to data for August.

Consumer prices increased at the same rate over the last 12 months, 3.7%, in metro Phoenix and nationwide, the U.S. Bureau of Labor Statistics announced Wednesday.

It was the Valley’s smallest year-over-year increase since it was 1% in February 2021, more than 2½ years ago.

Excluding the volatile food and energy categories, Phoenix prices went up 3.5% over the 12 months ending in August, slower than the national pace of 4.3%.

The Labor Department provides full consumer price reports for metro Phoenix every other month. Valley prices ticked up .1% over the past two months, below the national rate.

How high was Phoenix inflation a year ago?

Local prices have settled since the Valley became an inflation hot spot last year, leading the nation with a 13% annual surge in August 2022. The region’s year-over-year price increases have grown smaller in each of the last six reports since then.

Although price increases are slowing, food, rent, automobiles, appliances, all cost considerably more than they did two years ago.

Wednesday’s report suggested that after inflation faded quickly over the spring and the summer, future declines will be much more gradual. National inflation dropped to 3% in June, down from a 9.1% peak in June 2022.

Federal Reserve officials are becoming more open to the idea that inflation is coming under control, though chair Jerome Powell warned last month it was still “too high.”

Will Fed stop raising interest rates?

The Fed is widely expected to skip an interest rate hike at its meeting next week. Wednesday’s figures keep the prospect of another rate increase later this year on the table, however, perhaps at its November or December meetings, economists said, because core prices ticked up a bit faster in August than in July.

Some of the forces that pulled down prices earlier this year — such as lower gas prices and improving supply chains, which reduced the cost of goods like furniture — have largely played out, economists say.

“We’re getting to the stage where we’ve basically had all the low hanging fruit in terms of disinflation,” said Blerina Uruci, an economist at T. Rowe Price. “The progress on core inflation over the coming months is going to be slow and it’s going to be uneven.”

The Associated Press contributed to this report.

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Annual metro Phoenix inflation rate drops back in line with rest of US