Authors: Kamryn Brunner


Despite a disappointing increase at the national level, the rate of Consumer Price Index (CPI) inflation in the Phoenix metropolitan area decreased again in December – returning to levels last seen in March 2021. At 2.7%, year-over-year price inflation in the Phoenix metropolitan area is now less a third of its 9.0% reading in January of last year. While this is the lowest rate of inflation the Phoenix area has seen since March 2021, it is the 34th consecutive month of the inflation rate being over 2.0%.

Between October and December Phoenix area inflation rates decreased 0.9 percentage points (local inflation numbers are published every two months); over the same period the year-over-year U.S. inflation rate increased 0.2 percentage points from 3.2% to 3.4%.

After running higher than the nation since August 2021, the Phoenix metro area – for the third period in a row – has a lower inflation rate than the U.S. Further, officially measured price inflation in the Phoenix metro area continues to be partly driven by the lagging measure of Shelter costs – excluding Shelter, year-over-year CPI inflation was just 1.7% (well below 2.0%). Shelter costs – the price of rent and owners’ equivalent rent – rose 4.1% over the past year.

Measurement lag in owners’ equivalent rent, specifically, means these reported price increases in CPI are occurring even as more real-time measures of rent in the Phoenix metro market are reporting declines.

Prices in Metro Phoenix decreased -0.5% (month-over-month) and increased +2.7% over the year (December ’22 through December ’23) – (BLS CPI Survey)

  • This is the first month-over-month decline in Phoenix area prices since December 2022. However, it would still take 27 consecutive months of declining prices to return to the long-run 2% trend.
  • Since the end of 2020, the typical Arizona household would have had to spend a combined $28,815 more on food, housing, transportation, medical care, and other goods and services to buy the same stuff as they were buying three years ago.
  • Because of inflation, today it costs the typical Arizona family over $4,100/year more to purchase the same goods and services as it would have cost in December 2022. Even if the rate of inflation slows, it would take a sustained period of deflation to restore historical price levels.


  • Inflation in metro Phoenix over the past 12 months (2.7%) is again lower than the national average (3.4%).
  • While overall prices are still rising on a year-over-year basis, the cost of transportation (including sales of vehicles) in the Phoenix metro market fell 7.4% from October to December – this is transportations largest month-over-month decrease in the rate of inflation since April 2020.
  • Inflation excluding more volatile food and energy prices (so-called “core inflation”) is higher than overall CPI inflation at 2.8% in the Phoenix area (again reflecting the disproportionate impact of Shelter costs on the Index).
  • Of the 23 urban consumer price indices tracked by the BLS in December, the Phoenix metro area had 5th lowest rate of measured inflation (year-over-year) – a steep drop from 2nd highest in April, and again highlighting the volatility local gas and food prices have had on the headline measure.
  • Slowing inflation means that real incomes in Arizona are finally rising again – over the past 12 months, average hourly wages have risen 5.1%, while prices have increased only 2.7%. However, keeping in mind longer-term rising prices, real wages in Arizona have fallen 8.5% since peaking in April 2020.