One major city has emerged as a standout winner in the war on inflation, with prices rising at a much slower pace than other areas of the US.
Consumer prices in Phoenix, Arizona, rose 2.6 percent between April 2023 and last month, according to data from the Bureau of Labor Statistics.
This nearly falls short of the Federal Reserve’s 2 percent target and is much lower than the highest national annual inflation rate of 3.4 percent.
The result is not unique either: the city has kept its rate below 3 percent since October of last year, and even fell to 2.2 percent in February.
Economists say the key to Phoenix’s lower inflation rate is cooling rents and home prices. NBC News reported.
Prices in Phoenix, Arizona, rose just 2.6 percent from April 2023 through last month, beating the national average of 3.4 percent and nearly meeting the Federal Reserve’s 2 percent target.
Experts insist that when rental prices go down, overall inflation also goes down, and home prices in Phoenix have fallen in recent years.
Experts explained that when rental prices fall, general inflation also falls.
“Housing inflation remains my most valuable indicator for the foreseeable future,” Federal Reserve Bank of Chicago President Austan Goolsbee said last month.
In Phoenix, median home sales prices increased 5.1 percent to an average of $450,000 between April 2023 and April 2024.
But the increase came as sales slowed sharply, with nearly 3 percent fewer homes sold than in the previous 12-month period, according to Redfin data.
Phoenix sellers are also buckling under lack of demand, with 31 percent of homeowners cutting their listing prices in March.
Mark Stapp, a real estate professor at Arizona State University’s WP Carey School of Business, told NBC News: “We’re probably past the worst in terms of this substantial and persistent increase in rents and home prices. in Phoenix, and we’re going to “Get back to something that more reflects normal trends.”
Phoenix is the fifth most populous city in the United States with 1,650,070 residents, according to an estimate for 2023. The population grew 2.6 percent from 2020 to 2023.
The city is attractive to people seeking a warm climate, job opportunities, a strong economy, as well as picturesque natural landscapes and a lively downtown.
The city is attractive to people seeking a warm climate, job opportunities, a strong economy, as well as picturesque natural landscapes and a lively downtown.
Phoenix is the fifth most populous city in the United States with 1,650,070 inhabitants, according to an estimate for 2023. The population grew 2.6 percent from 2020 to 2023
In recent months, the population boom has slowed – with a new analysis from Thursday showing that the previous annual growth rate of 1.6 has dropped to only 0.4 percent between 2019 and 2023.
Housing projects started before and during the pandemic are now wrapping up and there are not enough newcomers or house hunters to fill the properties.
“It’s going to be a painful period of adjustment,” Moser told NBC News.
In some apartment complexes the vacancy rate is as high as 11 percent, well above the 6 percent he considers typical of a healthy market.
Moser said this could be good news for renters, who could see rent declines of between 2 percent and 4 percent over the next year.
The slowdown in rents in Phoenix has also had an impact on the city’s overall “housing rate,” which is how much it costs to keep a roof over your head.
This index is key to the overall inflation rate and has contributed to other similarly below-average inflation rates in areas such as Houston and Alaska.
