The Bureau of Labor Statistics reported yesterday that the South is starting to see an increase in inflation. Prices in the South are rising at a higher rate that the rest of the United States. The consumer price index, the most common measure of inflation, rose 2.3% on an annual basis in February. The rest of the country experienced a 2.1% increase.
This increase in the CPI in the South is quite significant when compared to last fall, when the region was actually experiencing a decline in the price level. In the last quarter of 2009, prices in the South were declining at a 2.6% annual rate.
The price level changes in the South have been driven largely by the transportation industry. Prices in the transportation industry declined by 8% last year. So far this year transportation prices are rising at at 13.3 % annual rate. The Atlanta economy, which is a major transportation and air travel hub, was hit hard by the recession as consumers cut back on discretionary travel spending. Now that consumer are starting to travel again, transportation prices are increasing.
The housing market is one of the only remaining markets experiencing deflation, or a decline in the price level. Housing prices in the South fell 1.3% since this time last year, while housing prices in the U.S. on average fell 0.6% over the same time period. Housing prices are not likely to increase substantially until the excess inventory of houses starts to fall.
For more local economic information, click here.
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