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Regional inflation


If everyone uses the same currency in the United States, shouldn’t prices and inflation rates be nearly uniform across the nation? To help answer this question, the U.S. Bureau of Labor Statistics computes a limited set of consumer price indices for consolidated metropolitan statistical areas (that is, the agglomeration of neighboring MSAs). They don’t provide as much detail as the nationwide CPI and they’re not necessarily available at monthly intervals, due to data sampling issues. But they can be revealing.

The graph above compares Cleveland and New York City: NYC prices seem to be climbing more than those in northern Ohio. Note that this doesn’t say anything about the levels, only the evolutions. But is this inflation differential uniform across goods? The graph below eliminates shelter from the mix and the gap between the two is noticeably smaller. In other words, differences in inflation for a refrigerator or a gallon of milk are much smaller across the country than differences in inflation for housing.

How these graphs were created: Search for “CPI CMSA Cleveland” and click on the monthly series. From the “Edit Graph” section / “Add Line” tab, search for “CPI CMSA NY” and select the monthly series. In the “Format Graph” section, change the mark type to “square” (there are marks for Cleveland because data are not available for every month). Finally, change the sample period to start on 1984-01-01. For the second graph, repeat the procedure by adding “shelter” to the search terms.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CUURA101SA0L2, CUURA210SA0, CUURA210SA0L2, CUUSA101SA0


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