Sun Belt cities, located in Southeast and Southwest regions of the U.S., had some of the greatest inflows of new residents during the pandemic. But now, they have some of the worst inflation in the country, a new study finds.
With the rate of inflation an eye-watering 8.3% as of August, every American has had to deal with the rising cost of goods and services. But inflation can vary by region based on an array of factors, including the availability of goods and services, as well as transportation and shelter costs.
Residents in Sun Belt are experiencing above-average inflation rates closer to 10%, according to consumer price index (CPI) data. Cities in this region also happen to have some of the sharpest individual increases in inflation in the last year.
Using CPI data, personal finance site WalletHub examined 23 of the largest U.S. metropolitan areas and scored them out 100, with 100 being the highest rate of inflation.
Here are the 10 cities experiencing the worst inflation:
- Phoenix-Mesa-Scottsdale, Arizona: 92.11
- Atlanta-Sandy Springs-Roswell, Georgia: 87.59
- Tampa-St. Petersburg-Clearwater, Florida: 84.16
- Miami-Fort Lauderdale-West Palm Beach, Florida: 72.84
- Dallas-Fort Worth-Arlington, Texas: 69.2
- Riverside-San Bernardino-Ontario, California: 68.71
- Denver-Aurora-Lakewood, Colorado: 67.12
- Baltimore-Columbia-Towson, Maryland: 66.79
- Minneapolis-St.Paul-Bloomington, Minnesota-Wisconsin: 62.74
- Houston-The Woodlands-Sugar Land, Texas: 61.99
The top-six metropolitan areas with the highest inflation are located in the Sun Belt.
In last place is Anchorage, Alaska, followed by the San Francisco Bay Area and New York City. Even before the pandemic, these cities already had a high cost of living, which might explain the relatively marginal increases in inflation.
Many of the top-ranked cities in the study were migration hotspots earlier in the pandemic, when people were migrating away from the Northeast and parts of California for cheaper properties elsewhere in the country, primarily in the Sun Belt.
But with a large inflow of new residents, these cheaper property markets are no longer as affordable as they used to be.
Even with the housing market cooling somewhat due to higher mortgage rates, all of the top ranked urban areas in the study have experienced home price inflation of 15% to 30% in the last year as of August, according to data from online brokerage Redfin.
The WalletHub rankings are based on CPI data for all goods and services. Notably, shelter costs account for 32% of the overall consumer price index — the biggest share by a wide margin. The study's score is calculated using equally weighted comparisons of home price growth looking back a year, as well as two months ago, using CPI data.