Money Matters - Updated Changes in Inflation by City Report

 With the year-over-year inflation rate at 2.3% in April — marking the lowest rate recorded since February 2021— the personal-finance website WalletHub today released its updated report on the Changes in Inflation by City, as well as expert commentary.

To determine how inflation is impacting people in different cities, WalletHub compared 23 major MSAs (Metropolitan Statistical Areas) across two key metrics involving the Consumer Price Index, which measures inflation. We compared the Consumer Price Index for the latest month for which BLS data is available to two months prior and one year prior to get a snapshot of how inflation has changed in the short and long term.
 

Biggest Inflation Problem		Smallest Inflation Problem
1. Los Angeles, CA		19. San Francisco, CA
2. San Diego, CA		20. Atlanta, GA
T-3. New York, NY		21. Minneapolis, MN
T-3. Baltimore, MD		22. Phoenix, AZ
5. St. Louis, MO		23. Dallas, TX

To view the full report and your city’s rank, please visit: 
https://wallethub.com/edu/cities-inflation/107537


Expert Commentary

What can be done to continue to slow down inflation?

“Addressing inflation in the current economic environment requires a coordinated strategy that integrates contractionary monetary and fiscal policies with targeted supply-side interventions. On the monetary front, the Federal Reserve has adopted a contractionary stance by raising benchmark interest rates, thereby tightening the money supply and curbing aggregate demand. Complementarily, contractionary fiscal policy entails either increasing taxes or reducing government expenditures, which serves to restrain public and private sector spending. At a minimum, the government should refrain from implementing policies that exacerbate the inflationary environment. In addition to demand-side measures, supply-side policies play a critical role in mitigating inflationary pressures. These may include reducing tariffs, which can lower import costs, and resolving global supply chain disruptions, such as those arising from geopolitical conflicts, to restore the efficient flow of goods and services. By expanding production capacity and alleviating cost-push pressures, supply-side measures complement monetary and fiscal efforts. Finally, transparent and credible communication by both the government and the Federal Reserve is essential for anchoring inflation expectations. Clear policy guidance helps to prevent the emergence of inflationary psychology-where anticipations of rising prices become self-fulfilling-and contributes to the overall effectiveness of inflation control measures. Nevertheless, it is imperative that policymakers proceed with caution to ensure that efforts to control inflation do not undermine economic growth or destabilize financial markets.”
Dr. Yongqing Wang – Senior Lecturer, The University of Arizona


Is raising interest rates a good or bad solution to control inflation?

“Using higher interest rates to control inflation is widely regarded as one of the most important and effective policy tools. However, whether it is a ‘good’ solution depends on the associated costs. Raising interest rates, all else being equal, reduces aggregate demand, which can in turn lead to lower output and higher unemployment. Moreover, higher interest rates can create financial strain for certain groups-particularly those with mortgages or other forms of debt-as their repayment obligations increase.”
Dr. Yongqing Wang – Senior Lecturer, The University of Arizona


What does the current inflation rate tell us about the future of the economy?

“After covid, the inflation rate in the U.S. peaked at approximately 9% in June 2022 but declined to around 2.4% by March 2025. This substantial reduction reflects significant progress and highlights the effectiveness of the Federal Reserve’s monetary policy in curbing inflation. However, the current rate remains slightly above the Fed’s long-term target of 2%, which is considered essential for maintaining price stability. Looking ahead, inflationary pressures may intensify due to newly introduced tariffs by the Trump administration, which are expected to take effect in the second half of 2025. Additionally, ongoing geopolitical tensions-such as the war in Ukraine and strained U.S.-China relations-continue to disrupt global supply chains and energy markets, further complicating the inflation outlook. In this context, it is crucial for policymakers to strike a careful balance between inflation control and promoting sustainable economic growth amid heightened uncertainty.”
Dr. Yongqing Wang – Senior Lecturer, The University of Arizona