By Matthew Holloway |
A new report from the Common Sense Institute finds that rising costs for housing, groceries, insurance, and child care continue to strain affordability for Arizona families, even as inflation has cooled from its post-pandemic peak.
According to CSI’s latest affordability rankings, Arizona is now the seventh least affordable state in the nation and ranks 45th overall when comparing household incomes to the cost of essential expenses. The state has fallen 12 spots in affordability since 2019, but remains more affordable than Florida, Oregon, New York, Massachusetts, and California, which ranked 46th through 50th, respectively.
CSI’s analysis found that Arizona households retain about 19.6% of their gross income after paying for taxes and basic expenses such as shelter, groceries, health insurance, car insurance, gasoline, and child care. That amounts to about $1,700 per month left over, compared to the national average of 24.7% ($2,170 per month).
The report found that Arizona households are spending about $19,300 more per year on essential expenses than they did in 2019, exceeding the national average increase of $15,400. CSI estimates that Arizona households have effectively lost 3.8% of their gross income to rising prices since before the pandemic.
Housing costs have continued to be the primary cause of affordability challenges in the state. According to a recent report, shelter and utility costs for Arizona households rose by $9,012 annually between 2019 and 2025, a 59% increase that ranked as the fourth-largest increase in the country. Arizona also experienced some of the nation’s fastest-growing grocery and car insurance costs during the same period.
CSI reported that grocery costs rose by $3,375, child care costs by $3,950, health insurance costs by $1,302, car insurance costs by $1,355, and gasoline costs by $313 between 2019 and 2025.
The report found that child care remains a major expense for working families. In Arizona, one full-time working parent must devote about 38% of their gross income to cover child care costs, slightly below the national average of roughly 40%. Nationally, CSI estimated that the average household spends about 16.9% of gross income on child care for preschool- and school-aged children.
“Inflation reports may show things are cooling, but that doesn’t mean life is getting more affordable for Arizonans,” said Zachary Milne, Senior Economist and Research Analyst for the Common Sense Institute AZ. “Our analysis shows the cost of everyday essentials is still significantly higher than it was before the pandemic, and for many families, incomes haven’t kept pace. That gap is what continues to drive the affordability challenges we’re seeing across Arizona today.”
CSI noted that inflation in the Phoenix area has moderated in recent months, with consumer prices rising 2.2% year over year in December. However, according to CSI’s Arizona inflation update, prices in the Phoenix metro area remain 28.9% higher than they were in December 2019, resulting in an additional $1,441 in average monthly costs for a typical Arizona household.
Arizona households are also carrying greater debt, coupled with declining credit scores and rising delinquency rates, at levels significantly higher than the national average, according to CSI’s April 1 report.
CSI detailed its data sources and methodology on its website.
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.
