The Factors Driving High Inflation Rates in Florida

By: Dan Cooper

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The Factors Driving High Inflation Rates in Florida

Inflation Rises 0.2% in June

According to the Consumer Price Index (CPI) report, shared by the Bureau of Labor Statistics (BLS), inflation rose 0.2% in June on a seasonally adjusted basis, after increasing 0.1 percent in May. On the other hand, over the past 12 months, the all items index increased 3.0% before seasonal adjustment. This represents a great deceleration, taking into account that in June of last year, the year-on-year inflation rate was 9.1%, the highest since November 1981. Inflation has moderated for 12 consecutive months and is at its lowest rate since March 2021.

Florida, the Focus of Inflation in the United States

Florida has become the focus of inflation in the United States. According to the BLS report, the Consumer Price Index for All Urban Consumers (CPI-U) for the Miami-Fort Lauderdale-West Palm Beach area rose 0.5% from April to June. On the other hand, the year-on-year inflation rate, in the 12 months ending in June, increased by 6.9%, more than double the national level. In addition, the index for all items except food and energy advanced 9.6% during the year. The year-over-year energy index fell 14.2%, while the food index continued to rise over the past 12 months, up 6.7%.

Why is inflation so high in Florida?

Economists point out that, in Florida, the state’s growing population has been driving up inflation, particularly through housing costs. The rise in population in the ‘Sunshine State’ accelerated during the pandemic, as remote work gave some Americans the freedom to relocate. “A lot of people keep coming to Florida because the economy is really strong and a lot of people like the fact that we don’t have an income tax like in New York, for example,” Amanda Phalin, an economist at the University of Florida, told CNN. “And in places like Miami, we’re seeing a lot of demand for real estate from non-Florida or non-American investors, usually wealthy people who want to own a nice home here,” she added.

According to the CPI’s June report, factoring in housing, homeowners’ equivalent rent increased 1.8% during the bi-month period and primary residence rent increased 1.7%. On the other hand, accommodation was the largest contributor to the index for all items except food and energy, which advanced 9.6% in the 12 months ending in June.

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