What Is Driving the Variations in Inflation Throughout U.S. Areas?
Elainia Gupta and Leslie McGranahan of Chicago Fed in this paper analyse the variations in inflation throughout US areas:
There was appreciable concern in the US over the elevated inflation price. With inflation greater than it’s been in many years, it’s pure to ask whether or not inflation is greater in sure areas of the nation than in others and why. When speaking, educating, or studying about inflation, we regularly focus solely on nationwide inflation.1 Nonetheless, there are sometimes vital variations between regional and nationwide inflation. For the calculation of the Client Value Index (CPI), the nationwide inflation price is an aggregation of the inflation charges of the varied city areas surveyed by the U.S. Bureau of Labor Statistics (BLS).
We discover that worth modifications within the housing sector are the primary driver of regional variations in inflation within the two time intervals we examine: January 2002–January 2023 and January 2019–January 2023. Though residents in several areas do have completely different buying patterns, we discover that this performs solely a small position in discrepancies in regional inflation. One exception to that is that decrease transportation expenditure weights within the Northeast have contributed to decrease inflation readings within the Northeast lately. Whereas these variations are notable, we additionally observe that inflation throughout areas tends to maneuver collectively and that in all 4 Census areas, inflation charges have been far greater lately than in earlier intervals.
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