Regional inflation registers at a 6.8% annual rate

Almost entirely attributed to housing and transportation prices

September’s inflation numbers for the Inland Empire came out last Wednesday, October 13, and they showed that prices in the region continue to climb. We even made headlines – highest metro-area inflation rate in the nation!

That headline number was a 6.8% inflation rate between September 2020-2021, up slightly from the annual rate we had in July, which was 6.5%. Housing (5.7% year-over-year) and Transportation (21.6%) continue to be hotspots and caused over 85% of the overall price growth. In fact, Transportation on its own (including everything from used car and truck prices to gas) explains almost half of the 6.8% rate.

The numbers in the middle column of the above table are the year-over-year inflation statistics reported by the Bureau of Labor Statistics, broken down by major expenditure category. To calculate the column on the right, I multiplied each inflation statistic by the fraction of a consumer’s budget that expenditure category represents. For example, Transportation prices grew 21.6% year-over-year. Since Transportation represents 15.1% of the typical Inland Empire consumer’s budget (car payments, gas prices, etc.), it contributes 21.6% x 15.1% = 3.3 percentage points of the 6.8% overall inflation rate; percentage-wise, that is (3.3/6.8 x 100 = ) 47.9% of that rate.

There was also notable inflation in several expenditure subseries, including “meats, poultry, fish, and eggs” (14.2%) and “Other personal services” (8%). Because these are small parts of the typical consumer’s budget, they don’t explain a large portion of the inflation that we are experiencing. That being said, these are things that we all buy on a regular basis, and so they provide convenient discussion points for general concerns about inflation.

Inflation continues to be concentrated in just a few expenditure areas, but as it becomes more visible in peoples’ daily lives, policymakers and other stakeholders will increasingly make it a point of debate.