It’s no secret-from it’s sandy beaches, thriving nightlife, and generally warm weather, Miami is a very attractive city. Indeed, natives, transplants, and tourists alike would agree there’s endless reasons to love the 305. However, the weather is not the only thing that’s hot in Miami! Apparently, the Magic City is leading the nation as the #1 metropolitan area with the highest inflation rate.
Highest Inflation Rate
A recent study published Tuesday by WalletHub, examined and analyzed changes in inflation rates by city. Notably, post-pandemic, the U.S. inflation rate hit a 40-year-high reaching 8.6% in May 2022 –the highest it’s been since 1981.
Subsequently, due to factors such as the Federal Reserve rate hikes, the inflation rate has cooled down a great deal. Although not quite at the target rate of 2%, as of February 2024, year-over-year inflation rate in the U.S. sits at 3.2%.
On the contrast, the study concluded the metropolitan area that makes up Miami-Fort Lauderdale-West Palm Beach is most affected by inflation.
Specifically, Miami’s year-on-year inflation was at 4.90%– the metropolitan area hit the hardest by inflation.
What Factors Affect Miami’s Inflation?
Factors impacting inflation varies. According to Eric Leeper, a Paul Goodloe McIntire Professor in Economics at the University of Virginia, “the impetus to inflation was unquestionably the $5 trillion in Covid-related fiscal spending. At the time, policymakers communicated that these were gifts, rather than loans that would be paid back through higher taxes.”
Another expert consulted by WalletHub, Zdravka Todorova, a Wright State University Professor, explains: “while the inflation rate has declined, some of its drivers have become structural to the economy. Business practices, utilization of high-tech inputs, concentration, pandemic effects on pricing, environmental and institutional factors, and wars are important factors that lead to inflationary pressures.”
While these are all general contributing factors on a national level, a report from the U.S. Bureau of Labor Statistics indicates that skyrocketing housing cost was the largest contributor to the inflation rates for the Miami area.
Rising Housing Costs In Miami & South Florida
According to the report, the housing payment for homeowners increased 7.5% and the rental price of the primary residence increased 8.2%, showing a consistent rise throughout the year.
Next, from December 2023 to February 2024, the variation in housing prices for owners was 1.0% and for rent was 1.1% in the Miami-Fort Lauderdale-West Palm Beach metropolitan area.
Overall, Miami’s figures are notably higher than the national average for housing price inflation, which closed at 5.7% for February 2024.