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Florida’s Inflation Rate Climbs — And It’s Higher Than the National Average
By Martha C. White MONEY RESEARCH COLLECTIVE
Anyone who’s been to the grocery store or filled up their gas tank lately knows that inflation is pushing Americans’ finances to the brink. And for residents of southern Florida, the pocketbook pain cuts even deeper.
In the U.S., consumer prices rose by 1.3% in the month of June alone — reflecting a leap of 9.1% total from one year ago, as announced in the Consumer Price Index (CPI) by the U.S. Bureau of Labor Statistics (BLS) last week. The prices for the Miami-Fort Lauderdale-West Palm Beach metro area skyrocketed by a whopping 10.6% in June on a year-over-year basis.
People in other parts of the state are facing financial stress, too, with inflation in Florida’s other biggest metro area already above the double-digit mark. The BLS also breaks out detailed consumer pricing data for the Tampa-St. Petersburg-Clearwater, on alternate months. In May, the consumer prices in greater Tampa jumped by an astonishing 11.3% — while the entire U.S. saw prices go up by 8.6% from May 2021.
Of course, the skyrocketing price of gas and other energy sources is a major contributor to inflation around the country, but the situation is worse down here: Nationwide, energy prices jumped by a whopping 41.6% from a year ago, but in greater Miami, they rose by a blistering 50.5%. Regular gas here rose 62.4% from last year, a bit higher than the nationwide 59.9% rise.
“Typically, there’d be lower demand, but because of COVID, there’s a lot of pent-up demand,” says William Christiansen, associate professor of finance and chair of the Department of Finance at Florida State University in Tallahassee.
Florida housing costs are a major contributor to high inflation
Shelter is a major cost hitting Floridians, and these fast-rising prices aren’t limited to the Miami area. Owners’ equivalent rents — a proxy for the amount of rent a homeowner would get if they rented out their home — increased by 5.5% for all Americans in June. But for homeowners in the Miami area, those costs rose nearly twice as fast, at a rate of 9.5%. And when the BLS looked at May data, they found that Tampa-area homeowners were paying 10.5% more than a year ago.
“One of the largest components of CPI is housing,” says Alex Horenstein, an associate professor of economics at the University of Miami. “That’s the most important for places like Miami and Tampa,” in terms of understanding why the cost of living has gotten so much higher.
The picture for renters is even bleaker. Nationwide in June, rent of primary residences rose 5.8% from a year ago. But in Miami, that figure was 12.3%, and in Tampa, it was 11.9%.
During the pandemic, Florida’s population swelled. The high demand with low inventory has caused skyrocketing housing prices and an increase in cash offers on homes. “Florida has been a very hot market for housing, and commercial real estate, too,” Christiansen says. “But the demand has been so high, that means the demand for housing has gone way up.”
This is especially true in Miami and Tampa, he adds. “Tampa has been a new hot spot. Miami is always a hot spot.”
And of course, this is on top of all of the other goods and services that have gotten pricier for Americans all around the country now, making budgeting for essentials harder. Food at home (groceries) is 12% more expensive than it was a year ago, with some items seeing much higher increases. For instance, margarine is 34.5% more expensive, and eggs are up a jaw-dropping 33.1% nationally.
Some other categories of goods are also experiencing price acceleration higher than the rate of inflation across the U.S. Nationally, men’s suits and coats jumped by 24.9%, window drapes and blinds are 15.9% higher, and cards and gift wrap are up by 13%. Even services like dry cleaning and haircuts have risen (10.2% and 6.3%, respectively).
How to adjust your budget for inflation
Rapidly rising inflation can make financial decisions hard, especially when it comes to trying to stick to your budget.
If you allocate a certain number of dollars for an expense (like gas), a high inflation rate may mean that amount is no longer adequate, even if your buying habits haven’t changed. Take the following steps to help cushion your personal bottom line from the impact of inflation.
Review your spending and cut expenses
It’s never a bad idea to reevaluate your spending. With rising costs on such a wide variety of things, purchases you might have made without a thought before might now be putting a dent in your wallet.
Take a look at your checking account and credit card statements to see where you spend the most each month and where you might be able to cut back. If you have memberships for things like a streaming service you hardly ever watch or a warehouse club you barely ever visit, canceling those can be a simple way to put money back in your pocket every month.
Since gas is one of the biggest expenses for most people, look for ways to minimize your driving. If your school or work schedule can accommodate it, join (or start!) a carpool to save on gas. You can also plan for more efficient and consolidated errand-running so you can maximize your gas tank.
There may be ways to cut down some of your monthly service bills. Look into a family plan to lower your cell phone bill or consider prepaid service. See if you could drop down to a lower tier of Internet data speed or a slimmed-down cable package.
When shopping for groceries, consider switching to generic brands and buying in bulk. If you have a small family, see if a friend, relative or neighbor wants to split bulk orders with you. Also pay attention to where you shop. Prices for the same item can vary by store so you may be able to save on inflated costs by switching stores.
Find ways to save more — or earn more
“The most important thing right now is to be prudent. Don’t spend money on things you don’t need,” Horenstein says. “In fact, it’s a good time to save money.”
Horenstein (as well as many financial advisors) say now is a good time to have an emergency fund in place. If your weekly budget is getting squeezed, having money socked away in a savings account is a smart money move. It will keep you from having to borrow at high interest rates if your car needs a new water pump or your fridge goes on the fritz.
If the reality of your bank account doesn’t leave you with the means to build an emergency fund, think about ways to increase your income. If you have the time, you might consider a side hustle or picking up some gig-economy work like driving, dog-walking or pet-sitting. Odd jobs, tutoring or picking up a part-time job are all options that will improve your personal finances. Stores and restaurants are still desperately trying to add workers.
Consider a new credit card
If you have high-interest credit card debt, the current economic climate is a double whammy: Debt repayment is more difficult if you have less money at the end of the month and variable-rate debt (which virtually all credit card debt is these days) is getting more expensive. When the Federal Reserve raises interest rates to try and tamp down inflation, that makes it more expensive to borrow.
If you’re in this situation, consider opening a balance transfer credit card offering a 0% APR promotional period for at least a year. Not having to pay interest should give you financial breathing room. Take advantage of that to pay down your existing debt (and resist the temptation to load up either your old or your new card with new purchases, which will just add to your debt).
If you’re financially disciplined and pay your credit card off in full every month, consider getting a cash back credit card. If you’re paying higher prices anyway, getting rewarded for your spending can take out a little bit of the sting.
Use online tools to shop around for the best prices
Shopping around can maximize your purchasing power when you’re contending with high inflation. Fortunately, the Internet and mobile apps have made comparison-shopping a lot easier than when our parents used to clip paper coupons.
Download the apps of your favorite grocery or big-box chains. Many will send you an alert if an item on your list goes on sale, which can make your weekly meal planning more economical. Most offer loyalty programs that can also help save you money with discounts on goods you buy often.
To cope with high gas prices, using the GasBuddy site and app can point you towards the cheapest station in your immediate location. If you do a lot of shopping online, browser extensions like Honey and CamelCamelCamel can help you seek out discounts and track prices so you know if you’re getting a good deal or not.
Make sure you’re getting the best deal on your car insurance and homeowners insurance by shopping around and comparing prices from different companies. You may be able to make small changes — like raising your deductible or taking a course to earn a safe driver discount — that could save you on your premiums.
And above all, remember — this, too, shall pass. “This isn’t going to last forever, that’s the good news. The U.S. has a resilient economy,” Christiansen says.
