Inflation rates in metro Atlanta — once the highest in the nation — have drifted down to below the U.S. average, according to government data released Wednesday.
The Consumer Price Index, a calculation using a collection of goods and services, shows prices up at 0.3% from February to April, a 3.4% pace in metro Atlanta during the past year. That is down from double-digit readings in 2022, although the region’s consumers are still plagued by increases in house prices, some food items and household electricity.
Nationally, the CPI was up 0.3% from March to April. Measured year-over-year, inflation was 3.4%, its lowest level in three years.
Atlanta’s home prices have climbed, but the area has benefitted more than many others from energetic construction of new apartments, said Mark Vitner, chief economist of Piedmont Crescent Capital, an investment advisory firm.
“In Atlanta, we’ve seen rents moderate a fair amount,” he said. “I think that’s the biggest variable. The largest increases in the CPI have been the places where housing costs have moderated the least.”
Rising rents nationwide were highlighted Tuesday by Jerome Powell, Federal Reserve chairman, as a key factor keeping inflation high.
While home prices are up a lot in the past five years, they have leveled off since fall, said Phil Vinson of Georgia Gwinnett College. “And we are actually building new housing in Atlanta — just not as fast as we’d like.”
Inflation has also been driven by various kinds of services, he said. “You need contractors and barbers. You need to be a place that can attract people who work in the service sector and Atlanta is well-positioned in that regard.”
Atlanta has the second-lowest inflation rate among the 23 largest metro areas, according to calculations by WalletHub, an online financial site. The highest inflation was in Dallas, where price increases have been running at a yearly pace of 4.9%, according to WalletHub and government data.
Prices for most things are higher than they were five years ago. Lower inflation only means prices are rising less rapidly. In the past year, average incomes for many workers have risen faster than prices, although rising debt means some people fell behind and have not caught up, economists say.
Because CPI is an average, the impact on households depend on their own spending habits and whether they are getting raises.
However, food is a part of all budgets, and there is some good news there.
Metro Atlantans have seen a dramatic deceleration in the overall price of food at home — up just 1.7% over the past year. Dairy foods actually dropped in price. But other items were up: The price of fruits and vegetables has risen 4.4% and cereal has climbed 5.1% from a year ago, the government said.
Other breaks for consumers came in prices of new vehicles — down 1.1% annually — and used cars and trucks, which have seen prices fall an average of 8.1%.
Gasoline, one of the few prices publicly advertised, was up 2.6% in a year.
Atlanta inflation peaked in mid-2022 at an annual rate of 11.7%, conjuring visions of the late 1970s and early 1980s when it reached nearly 20% and the Federal Reserve’s rate hikes jammed the brakes on the economy to bring rates down.
The Fed’s rate hikes triggered two deep, but relatively brief recessions, in which the unemployment rate hit 10.8%.
This time, the Fed has been aiming for “a soft landing,” in which it cools the economy and trims inflation without spinning the economy into a ditch. The Fed has lifted interest rates to their highest level in more than two decades, but so far, growth has continued to be solid and inflation has dropped.
Powell said Tuesday that the economy “is different this time” because so many Americans refinanced their mortgages at very low rates before the Fed began raising borrowing costs in March 2022. Many large businesses also locked in low rates at that time.
“It may be,” Powell said, that the Fed’s rate policy “is hitting the economy not quite as strongly as it would have if those two things were not the case.”
Even so, inflation remains persistently above the Fed’s 2% target.
The Fed has delayed expected rate cuts while it watches various measures of prices with one eye and the slowing job market with the other.
Inflation may not fall to that 2% target until 2026, but the effects of the Fed’s policies are not immediate, Vitner said.
“I think the rate of decline in the CPI is likely to slow,” he said. “I think they could cut rates in September. They don’t need to wait until rates come down to 2%.”
-- The Associated Press contributed to this story
