Jan 17, 2023 - Business

Seattle has 3rd highest inflation in nation

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Illustration: Sarah Grillo/Axios

Seattle has the third highest inflation rate among large U.S. metropolitan areas, a regional economist says, and recent federal data shows housing, food and energy costs drove the increase the city saw over the past year.

Why it matters: Prices in the Seattle area increased only 0.1 percent for the two months ending in December, the U.S. Bureau of Labor Statistics reported last week. But Seattle's inflation rate remains comparatively high due to the oversized bite of housing and shelter costs.

Driving the news: Based on the most recent Consumer Price Index — which measures the average cost of goods and services over time — Seattle had an inflation rate of 8.4%.

  • That put it behind only Miami, with an inflation rate of 9.9% and Phoenix at 9.5%.
  • Anneliese Vance-Sherman, a regional economist at the Employment Security Department, told Axios that in addition to reviewing the most recent numbers from November and December, she also compared our city to other urban areas, assessing which had the highest and lowest 12-month growth.

By the numbers: Over the last 12 months, the cost of housing in the region went up 10.7%, according to the consumer price report.

  • In 2022, food prices in the Seattle metropolitan area climbed by 11.3% with the cost of restaurants and other prepared meals increasing 15%.
  • Energy prices went up 5.7%, largely as a result of skyrocketing gas prices.

The big picture: Jake Vigdor, University of Washington professor of public policy and governance, told Axios the inflation we're experiencing in Seattle is not a local problem, but a global one.

  • Supply chain issues and labor shortages are having worldwide impacts.
  • What economists call the wage-price spiral is also in play, he said. Costs go up and people ask for raises; they get them and then employers raise prices to keep up.

Of note: Vigdor said that labor shortages are "driving inflation much more than wages."

  • Seattle and Washington state, with minimum wages of $18.69 and $15.74 an hour respectively, are among the highest in the nation.
  • Out of 103 metros studied, the Seattle-Tacoma-Bellevue area had the 14th-largest gap between employment and the labor force, according to the Puget Sound Business Journal.
  • Between April 2020 and July 2021, the labor force increased less than one percent at the same time employment increased 15.7%.
  • Service industries, including restaurants, childcare and health care in the Seattle area have been especially hard hit, he said.

What we're watching: It all comes back to housing and real estate prices, said Vigdor, who said that there won't be much relief on inflation unless the worker gap is filled.

  • "Workers aren't moving here because they can't afford to live here," he said.
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