Thinking of Moving to Florida? Think Again!

S. Fla.'s 5.1% inflation rate outpaces rest of U.S.
By Harriet Johnson Brackey

South Florida Sun-Sentinel

November 16, 2007

Prices for consumer goods in South Florida are rising at a rate faster than in any metropolitan area in the nation. Again.

The troubling news for consumers came Thursday from the federal Bureau of Labor Statistics. Prices in the Miami-Fort Lauderdale metropolitan area rose at a 5.1 percent annual rate during the 12 months ended in October, compared with 3.5 percent nationwide.

The survey does not include Palm Beach County, but price increases for housing, transportation and other consumer goods are comparable across the region.

South Florida is at the top of the heap, compared with Atlanta (4.8 percent), Chicago (4.7 percent), and New York (3.1 percent), all the way down to Houston (2.5 percent.) And this area has been at the top of the list of 10 major metro areas for six months.

Nationwide, inflation is rising primarily because of food costs and the largest increase in energy costs in five months.

That news sent shivers through the stock market Wednesday. The Dow Jones industrial average fell 120.96 points to 13,110.05.

Wall Street is concerned about the effect of rising gas prices on consumer confidence. Although oil prices have come down from the highs seen last week, they remain elevated and could crimp consumer spending as the all-important holiday shopping and travel season approaches.

Locally, consumer prices have been increasing at a faster rate than any other metropolitan area since May. The highest local inflation rate in recent years was 6.1 percent in early 2006.

The same economic trends that are pushing prices up nationally are at work in South Florida, but the effect is greater here.

"It looks like the contributing factors [in South Florida] were housing, transportation and food and beverages," said Bureau of Labor Statistics Economist Karen Ransom in Atlanta.

In certain categories, the local numbers are practically double the national inflation rate. Housing rose at a 6.1 percent annual clip in South Florida over the past year, compared with a 3.1 percent pace nationwide. The inflation rate locally for transportation — which includes the cost of gasoline — was almost 30 percent higher than the national number.

The labor statistics bureau reports local inflation rates every other month, while the national Consumer Price Index comes out monthly.

Nationwide, the Consumer Price Index increased by 0.3 percent in October, the second consecutive month at that rate. In South Florida, the index rose 1.0 for the months of September and October.

Wall Street is hoping that the Federal Reserve, which has already cut interest rates twice, will reduce rates further to keep the economy's problems from triggering a downturn.

The consumer price report included the following national inflation rates:

Gasoline prices were up 1.4 percent in October, the largest jump since a 10.5 percent rise in May.

Energy prices are rising at an annual rate of 12.3 percent, compared with a 2.9 percent increase for all of 2006.

Food costs rose by 0.3 percent in October and are up 5.5 percent at an annual rate so far this year, more than double the 2.1 percent rise for all of last year. That price acceleration is blamed in part on higher demand for ethanol, which has pushed up the cost of corn and other food products.

Outside food and energy, core inflation is rising at an annual rate of 2.3 percent so far this year, a slight moderation from the 2.6 percent gain of 2006.

The Fed plays close attention to core inflation, thinking it provides a better reflection of underlying inflation pressures.