Which US Cities Have the Highest and Lowest Inflation?

Inflation is improving on average, but recent data shows some areas are experiencing slower price increases than others.

The latest Consumer Price Index (CPI) showed that prices rose 2.5% annually in August, the lowest reading since 2021. The CPI measures the average rate of inflation across all U.S. regions. However, price changes aren’t consistent, and some cities are experiencing more inflation than others.

Bureau of Labor Statistics data shows consumers in many urban areas have larger price increases than the national average. 

“There are big regional differences, with many cities still holding above the national average,” wrote Priscilla Thiagamoorthy, BMO Global Markets senior economist, in an analysis. “Still, inflation has come a long way from the four-decade highs seen during the summer of 2022.”

Chicago, New York Have Highest Inflation

The Chicago area experienced an annual CPI inflation rate of 3.8% in August, the largest of the 13 metropolitan regions included in the latest data. The New York area had the next highest annual inflation rate at 3.7% year-over-year, while the Detroit area’s was 3.5%.

Some regions with the lowest inflation were influenced by one major cost for households.

“On the other end of the spectrum, a decline in gas prices has helped the South,” noted Priscilla Thiagamoorthy, BMO Global Markets senior economist. 

On Monday, the national average for a gallon of regular gasoline was $3.21, down 66 cents from a year ago. Drivers in states like Georgia and Texas were paying less than $3.

Subsequently, Atlanta and Houston saw the smallest price increases of any urban area in the contiguous U.S.—inflation was at 1.7% in each location.

The Bureau of Labor Statistics breaks out inflation data for different metropolitan areas each month. Metro area CPI is calculated every other month, alternating between 10 major metropolitan areas and urban Alaska measured one month and eight other metro areas and urban Hawaii measured the next. Three metros—Chicago, Los Angeles and New York—are measured monthly.

The batch of metros measured in July also showed additional regional variations in inflation. Inflation was at 4.1% annually in the Dallas-Fort Worth region and 3.7% in the Washington, D.C. area, while consumers in Denver region saw annual price increases of 1.9%.