Inflation is declining faster in the Twin Cities than in the United States as a whole

Inflation is on a steady downward trajectory for both the Twin Cities and the United States, according to the latest set of data released on Tuesday from the US Bureau of Labor Statistics. People in Minneapolis-St. Paul got more relief last month from big price hikes than the rest of the US. This region saw a smaller year-on-year increase in the consumer price index in November – 5.3% compared to 7.1% for the US. of the year. Since rising 8.7% in May, inflation in the Twin Cities has now slowed for three consecutive readings. Regional numbers come out every two months. The US Consumer Price Index, which is released each month, also fell, after reaching 9.1% in June, the highest level in four decades.

Food costs are still rising rapidly

Food prices are still rising rapidly. Prices were 13.7% higher last month than a year ago in the Twin Cities, and are the most expensive this year. Meanwhile, US food prices have slowed slightly in recent months, but are still seeing significant increases, rising 10.6% in November. Flour, eggs, butter and margarine saw some of the largest annual increases of 20% or more nationally. Meanwhile, a handful of categories, such as beef, bacon and related products, saw price drops.

Gas prices are going down

Gas prices are now almost as low in Minnesota as they were a year ago. After rising as high as $4.76 a gallon in June, gas prices in Minnesota are now back at just over $3 a gallon, according to AAA. Prices here and nationally are falling – demand for oil and gas is falling as countries, particularly in Europe, prepare for a recession. The latest inflation data reflects where we were last month, with fuel prices up 12.6% for the Twin Cities over the year and 10.8% for the US, far below the 40% to 50% hikes recorded earlier this year.

Car prices are moderate

New and used cars were one of the first major categories to see a significant price hike starting in the spring of 2021, a precursor to the more widespread inflation that is starting to emerge in other areas of the economy this year. But price increases in this category were finally moderate, rising less than 1% last month in the Twin Cities and 3.6% in U.S. auto production, as semiconductor supply has been slow to catch up. Meanwhile, the increasing availability of new cars has reduced the severe demand for used cars.

Rents are starting to slow

Housing inflation largely reflects what happens to rents as well as utility costs. (This does not include home prices, which have been cooling as the Federal Reserve raised interest rates to curb inflation.) After a great year of rent increases, there are many signs that rents are starting to fall — and are expected to fall next year. . In November, CPI housing costs rose 3.8% in the Twin Cities and 7.8% in the United States.

Calming services too

The surge in inflation was initially driven by reduced supply of goods due to manufacturing and shipping restrictions. But lately, services have been the culprit — things like medical costs, transportation, and rent. Wages increases tend to be the main driver of higher prices in this category. Services inflation showed some signs of slowing last month in the Twin Cities, rising just 4.3% over the year. But it was higher for the United States, at 7.2%. Fed officials are watching this category closely because they are concerned that inflation in this area may be more stable and take longer to abate.

Research: Marigot Webster, Star Tribune

Infographics: Mark Boswell, Star Tribune

Source: Bureau of Labor Statistics