Phoenix drops from top spot in US for inflation in 2022
Inflation nationally cooled at the end of last year and metro Phoenix dropped from the top of the list of large cities tracked by the federal government.
Still, the region ended 2022 with the second-highest inflation rate for the year, trailing only Miami.
Local prices rose 9.5% around metro Phoenix for all of 2022. In Miami, that rate was 9.9%. Inflation has cooled significantly in Phoenix since hitting a peak of 13% for the 12 months ending in August, followed by a decline to 12.1% in October and then to 9.5% in December. The Bureau of Labor Statistics tracks inflation every other month in Phoenix and most of the 23 other cities for which it calculates inflation.
Overall U.S. inflation rose 6.5% for the 12 months through December, showing substantial improvement later in the year following a series of interest-rate hikes by the Federal Reserve. Nationally, inflation got as high as 9.1% in June 2022, a 40-year high.
The Bureau of Labor Statistics won't calculate inflation for nine other large metro areas until next month, including the Tampa-St. Petersburg area, which is still showing a 9.6% rate for the 12 months through November. But it's unlikely that Tampa's rate will remain above Phoenix's 9.5% given that national inflation cooled noticeably toward the end of 2022. The December numbers for Phoenix and other areas are still subject to revision.
So far, San Francisco and Los Angeles showed the lowest big-city inflation, with prices in each metro area up 4.9% for the 12 months ending in December. Most of the nation's inflation hot spots, including Phoenix, have struggled with rising rents and home prices, both of which count heavily in the BLS calculations.
Rising prices mean belt tightening for consumers
Despite the improvement toward year end, 2022 was marked by substantially higher prices, causing many consumers and businesses to spend less. Steve Bulissa complained that he has paid more for gasoline and a range of grocery items from soft drinks and bread to canned vegetables, with some items rising by one-third or more in price.
"I like to go to the store and talk to people," said Bulissa, a retiree who lives in Glendale. "I tell them that they had better buy things now because they're going up more later."
Bulissa likes to give liverwurst to his cat as a treat and noticed that prices for that item, along with conventional pet food, also have climbed. Overall, he figures food prices on his shopping list have risen at least 35% on average compared to where they stood before the COVID-19 pandemic hit.
Among specific food items tracked by the Bureau of Labor Statistics, egg prices surged 59.9% in 2022, the largest grocery increase by a wide margin, followed by butter/margarine, up 35.3%, and lettuce, up 24.9%. An outbreak of avian flu decimated chicken flocks and was one factor behind the egg-price increase.
Some signs of moderating prices
Over the past 12 months through December, food grocery items jumped 11.8% on average across the U.S., while food at restaurants rose 8.3%. Fuel oil surged 41.5% for the year, and natural gas climbed 19.3%. However, gasoline for the 12 months dipped 1.5%, as supplies came more into balance with demand.
And while new vehicle prices increased 5.9% in 2022 nationally, those for used cars and trucks fell 8.8%. Inflation also was subdued for medical care, up 4.1%, and for clothing, up 2.9%.
"Inflation slowed sharply at year-end as consumers got relief from lower gasoline prices, and prices of most foods rose more slowly," said Bill Adams, chief economist at Comerica Bank. The latest report for December "was welcome good news after a very bad patch for inflation."
Still, he expects the Federal Reserve to keep raising interest rates for at least a couple more months, for the unemployment rate to increase by perhaps one percentage point this year and for the national economy to enter a mild recession.
The next metro-Phoenix inflation rate, for the 12 months through February, will be released in mid-March.
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