By Matthew Holloway |
The annual inflation rate in the Phoenix metropolitan area slowed to 2.8% in June, remaining below the national rate as falling energy prices and comparatively modest shelter-cost growth eased pressure on the region’s Consumer Price Index (CPI).
The Phoenix-area CPI increased 2.8% during the 12 months ending in June, down from 3% in April, according to a new Common Sense Institute (CSI) analysis of federal inflation data. National consumer prices increased 3.5% over the same annual period.
CSI attributed much of the local decline to energy prices, which fell 6.4% during June after increasing 26.5% between February and May. The earlier increase helped drive Phoenix’s annual inflation rate from 1.7% in February to 3% in April, according to CSI.
Energy remained more expensive than it was one year earlier. The U.S. Bureau of Labor Statistics reported that Phoenix-area energy prices were up 14.1% year-over-year in June, while gasoline prices were 26.2% higher. The local energy index declined 4.4% over the two-month period ending in June, including a 10.7% decrease in gasoline prices.
Nationally, the CPI declined 0.4% from May to June on a seasonally adjusted basis, marking the largest monthly decrease since April 2020, according to the BLS national inflation report. The national energy index fell 5.7% during June, including a 9.7% decline in gasoline prices. National consumer prices remained 3.5% higher than one year earlier, while energy prices were up 15.7%.
Shelter costs also helped keep Phoenix inflation below the national rate. Shelter prices increased 1.4% year-over-year in the Phoenix area, compared with 3.3% nationally. CSI said home prices have cooled in Arizona during the past two years while national home prices continued to increase, reducing shelter’s contribution to Phoenix-area inflation.
CSI said the gap between Phoenix and national shelter inflation has narrowed during the past six months as housing markets elsewhere began to cool. When shelter costs are excluded, CPI growth in Phoenix and across the country is nearly identical, according to CSI.
Phoenix-area food prices increased 2.2% year-over-year in June. The local index excluding food and energy rose 2%, while the comparable national index increased 2.6%. CSI separately calculated that the Phoenix index for all items excluding energy increased 2% from the previous year, up from 1.7% in April.
Among the 23 metropolitan areas compared by CSI using the latest available BLS data, Phoenix recorded the fifth-slowest year-over-year inflation rate. The region had posted the fourth-slowest rate among the 14 metropolitan areas reporting April figures.
The recent slowdown follows several years of substantial price increases. CSI calculated that Phoenix-area prices have risen 33.4% since June 2019, compared with a 30.3% national increase. According to the institute, the increase is “adding approximately $1,673 in monthly expenses to the average Arizona household.”
From June 2024 through June 2026, cumulative Phoenix-area inflation was 3%, below the approximately 4% increase that would result from prices growing steadily at an annual rate of 2%, according to CSI.
CSI cautioned that changes in individual categories can have an outsized effect on the headline CPI because the index is a weighted average of price movements across goods and services. CSI identified volatile energy prices as a significant driver of both the local and national figures and estimated that alternative measures place the Phoenix area’s underlying inflation rate closer to 2% than the 2.8% headline figure.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
