San Diego Is The City With The 4th Highest Rise In Inflation

By Debbie L. Sklar, Times of San Diego

February 14, 2023

Eggs, gas, and milk … you name it, everything is higher than ever.

So, with the year-over-year inflation rate at 6.4% in January, the personal finance website WalletHub Tuesday released its report on the Cities Where Inflation is Rising the Most.

To determine the cities where inflation is rising the most – and thus is the biggest problem – WalletHub compared 23 major MSAs (Metropolitan Statistical Areas) across two key metrics involving the Consumer Price Index, which measures inflation.

It compared the Consumer Price Index for the latest month for which BLS data is available two months prior and one year before getting a snapshot of how inflation has changed in the short and long term.

Inflation Rise in San Diego (1=Most, 12=Avg.):

What are the main factors currently driving inflation?“The current inflation is the result of excessive overspending by the U.S. government well beyond the initial Covid crisis, easy monetary policy in 2021, and some Covid and job market-driven supply constraints,” said Jon A. Hooks, Ph.D., CFA, professor, Albion College.“Inflationary pressures are slowing down. In December CPI-U declined -0.1% compared to November. The good news is that the energy sector saw the largest decline. Gasoline, fuel oil, electricity, and utility gas all declined. This is important because energy is an input of production for every other commodity, which means that inflationary pressures in non-energy items should slow down as well in the coming months. Areas with notable price increases include food and shelter. Shelter in particular is a serious structural issue and can be alleviated with more affordable housing policies. Food prices continue to experience the lingering effects of COVID-related production disruptions and transportation costs, which continue to rise,” said Pavlina R. Tcherneva, associate professor of economics, Bard College; Director, OSUN Economic Democracy Initiative; research scholar, Levy Economics Institute; expert, Institute for New Economic Thinking.

Is raising interest rates a good or wrong solution to control inflation?“The point of interest rate increases is to slow down the economy and thus cool demand. Pressure on prices thus falls. It’s effective for controlling the inflation rate but does not come without some pain,” said Jonathan K. Hanson, MPP/MPA program director; lecturer, at the University of Michigan.“Unfortunately, higher interest rates are the only solution to the demand side causes of the current inflation. The federal government went too far with stimulus checks and enhanced unemployment checks, and the Federal Reserve has no choice but to reign in the excessive demand. I guess that we are likely two or three additional rate increases away from being able to see inflation moderate toward the Fed’s 2% target. This depends on how economic growth responds to the rate increases,” Hooks said.

What does the current inflation rate tell us about the future of the economy?“It seems that we are on the right path. On a 12-month basis, inflation growth has been slowing down. Notably, energy costs are decelerating and other items such as used cars and trucks, and apparel have been declining. With additional investment in logistical support and a decline in transportation services, I believe we will see declines in other items that impact families’ pocketbooks – such as food. It is important to recognize that rising shelter costs have been a significant burden on American families well before we saw rising inflation last year. To take off that pressure, public policies need to invest more in affordable housing. Rising interest rates only make matters worse,” Tcherneva said.

“Even if inflation moderates, this only means that prices increase more slowly. It does not bring prices down. It is possible that if we can solve the supply-side issues the prices of some goods can come down. The hope is that the Fed’s policy actions designed to slow inflation do not lead to a deep economic downturn beyond the fallout we have already seen in the technology and banking industries,” Hooks said.

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