Leading Indicators

Inflation in Greater Philadelphia: The Spring 2022 Update

Prices are continuing to rise both across the nation and in Greater Philadelphia. With the Bureau of Labor Statistics’ recent release of inflation estimates, we continue to track rising prices in Greater Philadelphia as part of our ongoing efforts to demystify the local impact of inflation.

 

What You Need to Know

  • At 8.4 percent, the recent April 2022 CPI estimate places Greater Philadelphia’s inflation rate slightly above that of the nation (by 0.1 percent).
  • Both Greater Philadelphia and the nation have not seen annual inflation rates this high in over 40 years.
  • The slowing of inflation at the national level may indicate future slowing of inflation in Greater Philadelphia.
  • With an average increase of 0.4 percent in metropolitan inflation rates from February to April 2022, signs are pointing to a plateauing of inflation across the nation.
  • Three metropolitan regions—Greater Miami, Greater Baltimore, and Greater San Fransisco—saw decreases in their respective inflation rates from February to April 2022.
  • Greater Philadelphia claimed the seventh highest April 2022 inflation rate among peer U.S. metropolitan regions – a three spot increase from the February 2022 ranking when it claimed the tenth highest inflation rate.
  • At 1.0 percent, Greater Philadelphia had the third highest increase in its inflation rate from February to April 2022 among peer metropolitan regions.
  • When disaggregating the CPI’s components, energy and transportation continue to act as the main contributors to inflation – with energy seeing a significant spike since February 2022.
  • Greater Philadelphia’s housing inflation rate increased from 6.2 percent in February 2022 to 7.9 percent in April 2022. This places Greater Philadelphia’s housing inflation rate at 1.4 percent higher than the nation.
  • National and some metropolitan estimates indicate a slowing of inflation and the possibility of reaching a peak soon.

 

Historic Inflation

On May 11, the April 2022 Consumer Price Index (CPI) estimates were released by the U.S. Department of Labor’s Bureau of Labor Statistics for Greater Philadelphia. Figure 1 adds the April 2022 estimates to our ongoing comparison of historic inflation rate for Greater Philadelphia and the U.S.

 

Graph instructions

 

FIGURE 1 

SOURCE: Consumer Price Index for all Urban Consumers (CPI-U) within the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD and the U.S. City Average from the U.S. Bureau of Labor Statistics.

 

At 8.4 percent, the recent April 2022 CPI estimate places Greater Philadelphia’s inflation rate slightly above that of the nation (by 0.1 percent). Historically, both Greater Philadelphia and the nation have not seen annual inflation rates this high in over 40 years. In fact, we expanded our historic inflation estimates back to 1975 to pinpoint the last time, in recent history, inflation rates were this high. The last large spikes in inflation in 1975 and again in 1980 were largely driven by consecutive restrictions on oil from the Middle East [1]. This surged prices for crude oil and drove up inflation rates since energy, transportation, and supply chains were impacted. Back then, the Federal Reserve also raised interest rates to combat high prices [1].

 

The larger April 2022 inflation rate for Greater Philadelphia, when compared to the national rate, may be a sign that inflation is beginning to reach its peak. While it is not uncommon for our region’s inflation rate to surpass that of the national rate (in fact, figure 1 shows how Greater Philadelphia’s inflation rate surpassed the national rate through much of 2019 and into 2020), our region has historically been slower to react to economic upticks and downturns than the nation. The slowing of inflation at the national level may indicate future slowing of inflation in Greater Philadelphia.

 

Regional Comparisons and Possible Signs of Slowing

Greater Philadelphia’s inflation rate continues to remain lower than many other peer U.S. metropolitan regions; it has, however, substantially increased since the last estimate in February 2022. Figure 2 details the December 2021, February 2022, and April 2022 inflation rates for Greater Philadelphia, the U.S., and a panel of large U.S. metropolitan regions.

 

FIGURE 2 

SOURCE: December 2021, February 2022, and April 2022 Consumer Price Index (CPI) estimates for all Urban Consumers (CPI-U) from the U.S. Bureau of Labor Statistics for all major U.S. metropolitan regions and the U.S.

 

NOTE: The Bureau of Labor Statistics only updates the CPI for certain metropolitan regions smaller than New York City, Los Angeles, and Chicago on a bimonthly basis.

 

As reported in our previous inflation updates, many U.S. metropolitan regions of the South and West still claim the highest inflation rates among their peers. As of April 2022, Greater Phoenix, Greater Atlanta, and Greater Miami still claim the top three highest inflation rates among their peers; a position they have maintained since February 2022. Yet the difference between their April and February 2022 inflation rates is far less substantial than the difference between their December 2021 and February 2022 rates. This minor increase from February to April 2022 holds true for many other metropolitan regions as well. The average inflation rate increase among the panel of metropolitan regions from February to April 2022 was 0.4 percent – a 0.5 percent decrease from the December 2021 to February 2022 average of 0.9 percent. In fact, three metropolitan regions—Greater Miami, Greater Baltimore, and Greater San Fransisco—saw decreases in their respective inflation rates from February to April 2022. This may indicate that inflation is slowing and maybe reaching its peak.

 

At 8.4 percent, Greater Philadelphia claimed the seventh highest April 2022 inflation rate among peer U.S. metropolitan regions – a three spot increase from the February 2022 ranking when it claimed the tenth highest inflation rate. At 1.0 percent, Greater Philadelphia had the third highest increase in its inflation rate from February to April 2022 among peer metropolitan regions. Only Greater New York City and Greater Seattle saw higher increases, at 1.2 and 1.1 percent, respectively. As mentioned above, a waning of inflation may take longer to be felt in Greater Philadelphia when compared to other metropolitan regions.

 

Comparing Components

Figure 3 details the inflation rates for the national CPI component estimates from April 2019 to April 2022 while figure 4 shows comparable information for Greater Philadelphia. Greater Philadelphia’s individual CPI component inflation rates continue to mirror those of the nation – with only a few differences.

 

FIGURE 3 

SOURCE: Consumer Price Index for all Urban Consumers (CPI-U) for the U.S. City Average from the U.S. Bureau of Labor Statistics. 

 

FIGURE 4 

SOURCE: Consumer Price Index for all Urban Consumers (CPI-U) within the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD from the U.S. Bureau of Labor Statistics.

 

Energy and transportation continue to act as the main contributors to inflation – with energy seeing a significant spike since February 2022. In Greater Philadelphia, the annual inflation rates for energy and transportation stood respectively at 32.9 and 20.9 percent in April 2022. This marks an 8.5 and 0.8 percent increase in the annual inflation rate for energy and transportation from February to April 2022, respectively. The national inflation rate for energy increased by 4.7 between February and April 2022. This largely reflects the surge in oil pricing due to limited supplies following both the decline in production in 2020 and Russia’s invasion of Ukraine [2].

 

Greater Philadelphia’s inflation rates for apparel and medical care are far more volatile than those of the nation. While the national inflation rate for apparel continues to modestly increase, our region continues to see bouts of growth and decline. By April 2022, the inflation rate for apparel in Greater Philadelphia stood 1.9 percent less than it had been in April 2021. For the national inflation rate, apparel stood at 5.4 percent greater than it had been in April 2021. Greater Philadelphia’s medical care inflation rate also seems to bounce from growth to decline rather suddenly (likely a reflection of methodological estimation than significant month-to-month pricing changes). Both the national and regional inflation rates for medical care hovered around a somewhat healthy 3.0 percent.

 

Greater Philadelphia’s inflation rates for food and beverages, housing, and recreation saw significant increases since August 2021 – largely mirroring national trends. The regional inflation rate for food and beverages increased from 7.9 percent in February 2022 to 9.2 percent in April 2022 – a 1.3 percent increase. This keeps Greater Philadelphia’s food beverage inflation rate higher than the national rate of 9.0 percent, but the gap seems to be closing. Similarly, the regional housing inflation rate increased by 1.7 percent from February 2022 to 7.9 percent in April 2022. This places Greater Philadelphia’s housing inflation rate at 1.4 percent higher than the nation – a widening gap with our region still displaying all the signs of a hot housing market. Greater Philadelphia’s recreation inflation rate largely mirrors increases at the national level.

 

The Takeaway

As predicted in our previous inflation brief, it seems that inflation is slowing at the national level. Some national estimates as well as slowing inflation rates from previously fast-growing metropolitan regions show that we could be nearing a peak. Recent efforts to raise interest rates may be the cause of this plateauing but high demands for oil may reverberate through energy markets and keep inflation alive for the near future. It does seem, however, that our region may be slightly behind the nation and other metropolitan regions in experiencing peak inflation. Momentum may continue to push inflation in Greater Philadelphia for a short time after a peak has been reached nationally.

 

Works Cited

[1] Rouse, Chair Cecilia, Jeffery Zhang, and Ernie Tedeschi. 2021. “Historical Parallels to Today’s Inflationary Episode.” The White House, 6 July. Retrieved from: (https://www.whitehouse.gov/cea/written-materials/2021/07/06/historical-parallels-to-todays-inflationary-episode/).

 

[2] Stevens, Pippa. 2022. “Rising fuel costs are a massive problem for business and consumers — Here’s why they’re so high.” CNBC, 19 May. Retrieved from: (https://www.cnbc.com/2022/05/19/fuel-is-a-problem-for-business-and-consumers-why-prices-are-so-high.html).