Florida Has Highest Inflation Rate In Country, According To Latest CPI

FLORIDA — Floridians might have noticed their wallets are a lot lighter following a trip to the grocery store.

The Consumer Price Index released Monday indicated that Florida has the highest inflation rate in the country with prices in the Miami, Fort Lauderdale and West Palm Beach area and the Tampa, St. Petersburg and Clearwater area rising the fastest.

Economists point to Florida's record-high housing costs as the reason for the rising inflation rate with the Miami, Fort Lauderdale and West Palm Beach area having the highest inflation rate of any Florida metro area at 9 percent over the last 12 months and the Tampa, St. Petersburg, Clearwater area reporting a 7.3 percent in the past 12 months ending in May, making it the third-highest inflation rate in the country.

The national average, according to the U.S. Bureau of Labor Statistics, is 4.0 percent.

The driving factor for the ranking boils down to rising housing costs resulting from an influx of residents moved to the state following the pandemic, seeking better weather and lower taxes.

"The lack of developable land is causing a slowdown in the development of new homes, keeping the residential inventory low and putting upward pressure on home prices," said Noah Breakstone, CEO of BTI Partners, a real estate investment and development firm based in Fort Lauderdale. “The challenge facing home builders is the inability to carry too much land for future homes, as it can often take two to four years to ready the land for development. Carrying that amount of land on their balance sheets can be viewed as a risk by Wall Street."

As a result, Florida’s residential real estate has grown more expensive amid limited supply, high demand and rising property insurance costs.

Between July 2021 and July 2022, domestic immigration to Florida grew faster than any other state in the country, according to the latest estimates from the Census Bureau.

And since housing costs account for almost a third of the CPI, a sudden increase in population is a major influence on the CPI, say experts.

Building new homes to satisfy the state's increased demands has also been hampered by inflation and supply issues, both of which have raised home prices.

While the price of a new home prior to the pandemic averaged $390,000 in Florida, that price rose 40 percent to 560,000 by the end of 2022.

The mass migration to Florida, partly due to incentives by Gov. Ron DeSantis' administration encouraging residents from the North to relocate to Florida, has put pressure on counties and municipalities to not only provide affordable housing but finance the necessary infrastructure and government services without placing the burden on longtime residents to pay bear the cost of the population increases.

Nevertheless, affordable housing advocates say that's exactly what's occurring. Renters are being forced from their homes to make room for new residents who are able to pay higher rents.

Moving companies experts MovingFeedback analyzed data from Zillow.com to determine which states have experienced the highest increase in average rent prices over the past three years and place Colorado at the top with Florida's metropolitan areas experiencing the second-highest increase in rents since 2020.

MovingFeedback said Florida has seen a 46.7 percent increase in rent prices in the last three years.

Florida renters were paying on average $1,448.43 between January and March 2020 and are now paying $2,126.06, a $677.63 increase.

In comparison, the state’s average annual salary rose only 7.6 percent in the past year.

“Rent demand is strong in the U.S. with rising homeownership costs," said MovingFeedback. "It is estimated that there is a shortage of 7.3 million affordable rental homes for those with low incomes. This paired with rising inflation means that rent prices have continued to soar."

The business brokerage firm, The Enterprise Group, found that nearly 11 million households spend more than 50 percent of their income on rent.

That analysis was backed up by the personal finance site, WalletHub, in its report on the Cities Where Inflation is Rising the Most.

WalletHub compared 23 major metropolitan areas across two key metrics of the Consumer Price and determined that the Miami, Fort Lauderdale and West Palm Beach area has the highest inflation in the country, rising 9.0 percent over the past 12 months.

The Tampa, St. Petersburg and Clearwater area came in third in the nation, with an inflation rate that rose 7.3 percent over the past 12 months.

Following rising housing costs, the CPI said the cost of used cars and trucks, motor vehicle insurance, apparel and personal care services have experienced the highest increase over the past month.

The food index increased 0.2 percent in May after being unchanged in the previous two months. The cost of food prepared at home rose 0.1 percent in the past month while the cost of eating out rose 0.5 percent.

Overall, the food index increased 6.7 percent over the last year, according to the U.S. Bureau of Labor Statistics, with cereals and bakery products rising 10.7 percent over the 12 months ending in May, meats, poultry, fish, and eggs rising from 0.3 percent to 9.2 percent over the past 12 months and the cost of dining out rising 8.3 percent.