Inflation continues to overstay its welcome. On top of that, it's also overachieving.
The Consumer Price Index report came out recently, with the CPI rising 0.5% month over month, and the core inflation rate is now 3.3%, exceeding experts' forecasting.
Using recent CPI reports, WalletHub released a story showing which cities inflationary changes hit the hardest. To come up with this study, WalletHub examined 23 metro areas, calculating how the CPI changes from two months and one year ago impacted the prices consumers in these areas are paying.
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The 10 cities inflation changes impacted the most
Here are the 10 cities where inflation has hit residents the most:
Overall Rank | MSA | Total Score | Consumer Price Index Change (Latest month vs 2 months before) | Consumer Price Index Change (Latest month vs 1 year ago) |
|---|---|---|---|---|
1 | Chicago-Naperville-Elgin, IL-IN-WI | 89.66 | 1.20% | 4.30% |
2 | San Diego-Carlsbad, CA | 88.98 | 1.60% | 3.80% |
3 | Boston-Cambridge-Newton, MA-NH | 88.77 | 1.50% | 3.90% |
4 | Urban Honolulu, HI | 83.18 | 1.00% | 4.10% |
5 | Riverside-San Bernardino-Ontario, CA | 78.79 | 1.80% | 2.90% |
6 | New York-Newark-Jersey City, NY-NJ-PA | 78.21 | 0.80% | 4.00% |
7 | Dallas-Fort Worth-Arlington, TX | 75.55 | 1.70% | 2.80% |
8 | Minneapolis-St.Paul-Bloomington, MN-WI | 75.13 | 1.50% | 3.00% |
9 | Los Angeles-Long Beach-Anaheim, CA | 72.78 | 1.10% | 3.30% |
10 | Tampa-St. Petersburg-Clearwater, FL | 59.35 | 1.20% | 2.30% |
Factors influencing inflation
The CPI report sheds some light on where things are going, and unfortunately they signify that inflation is growing, not shrinking. "The Fed has been waiting for clear signs that inflation is trending lower again, and they got the opposite. Until that changes, the markets are going to have to remain patient about additional rate cuts," remarked Ellen Zentner, the chief economic strategist for Morgan Stanley Wealth Management.
At first, there was optimism that rate cuts might continue, though, not at the same cadence as the end of 2024. Now, it appears there might not be any rate cuts until the end of 2025.
Inflation's culprits are the usual suspects: Rising costs in insurance, energy, shelter, food and fuel continue to pinch consumers' budgets. Add in proposed tariffs from president Donald Trump, and it could be a recipe for growing inflation.
Along with floating tariffs to goods imported from Canada, Mexico, China, Taiwan and the European Union, Trump wants to impose a 25% tariff on all steel and aluminum goods. How would this impact prices moving forward? It could raise the price of a $25,000 car from Mexico or Canada by up to $6,250, by some estimates.
Shielding against inflationary measures
The CPI report shows the potential direction inflation might tread. It also gives you some time to protect your money against rising costs.
One of the saving graces of no immediate rate cuts is savers can still earn a higher rate of return. While high-yield savings accounts have dipped some, you can still earn a healthy rate of return. Here are some of the top choices:
A high-yield savings account is only one solution. If you really want to outpace inflation with your earnings, the best option continues to be investments, as historically, they earn a much higher rate of return.
One of our top online brokers is Fidelity. They offer free advice to newer investors with a portfolio of less than $25,000. If you have a portfolio exceeding this amount, you'll have access to a live agent for a fee of 0.35% of your assets.
And with prices rising slightly quicker than anticipated, having the right budgeting app can ensure you're maximizing your savings and investment goals, while curtailing spending that isn't helping you reach them.
We recommend Quicken Simplifi. It's easy to use and can anticipate future cash flows, showing you where your money is going and identifying patterns you might need to alter to stay in line with savings goals. With prices becoming tighter, having a fresh perspective helps.
The bottom line
The CPI report shows inflation is slightly exceeding even experts' forecasting. And the WalletHub reports shows where inflation changes have the most impact. Whether you live in one of these areas or not, having a plan in place now can help you find solutions that outpace inflation. Because it appears it's going to overstay its welcome.
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