In this article, we will discuss the 25 states with highest inflation rates in the US. If you want to skip our discussion on the macroeconomic environment in the US, you can go directly to the 5 States with Highest Inflation Rates in the US.
Inflation rate in the United States recorded a decline in October for the first time in 4 months. The drop in inflation to 3.2% also led to a decline in treasury yields and a simultaneous increase in stocks. The year-on-year (YoY) figure of 3.2% was slightly below the expected 3.3%. Gregory Daco, Chief Economist at EY Parthenon, described the report as positive overall. He believes it will provide reassurance to Federal Reserve policymakers that the current policy is restrictive enough to bring inflation down to 2%. In contrast, Jamie Dimon, chief executive at JPMorgan Chase, expressed a more cautious stance. He shared that people may have “overreacted to short-term numbers” and emphasized the need to refrain from such reactions. Dimon cautioned that the US Federal Reserve might need to take additional measures to control prices and that inflation may not subside rapidly.
According to the consensus opinion of economists polled by the Financial Times, the US central bank is expected to avoid interest rate cuts till at least July 2024. While the majority of respondents believe that the Federal Reserve has completed the phase of increasing rates as a part of its monetary tightening campaign, nearly two-thirds of those surveyed think that the central bank will not initiate a reduction in its benchmark rate before the third quarter of 2024. Economists think that the Fed would want to see more consistent improvements in inflation and ease in labor demand before it implements any cuts. The US Bureau of Labor Statistics shared that around 150,000 jobs were added to the US economy in October. This figure marked a “substantial slowdown” from the monthly average of 260,000 jobs observed throughout 2023. The current trends in the labor market reflect a decline in leverage for workers compared to the recent past. In Q3 2023, around 18% of new recruits received a signing bonus, down from 28% in the second quarter of the year. Furthermore, 58% of new employees negotiated higher pay for their new positions, a decline from the 65% observed in the previous quarter.
Keeping in view these circumstances, individuals are likely to carefully consider the inflation rates across the United States before making decisions about settling in a particular location and give preference to states with the lowest inflation in 2023. Young adults, in particular, show more concern about the economic environment in specific states and the associated job prospects. The presence of notable companies like Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL) acts as a significant attraction for people considering settling in a particular state or a country. You can also check out the 20 Countries With The Highest Inflation in 2023 here.
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Our Methodology
To shortlist the 25 states with highest inflation rates in the US, we referred to the latest report published by the JEC Republicans’ State Inflation Tracker in November 2022. The inflation rates indicate the extent to which prices have risen since January 2021. The states have been ranked in ascending order of the total inflation costs, revealing the additional amount the average US household needs to spend in comparison to January 2021. With this context in mind, let’s begin our list of inflation rates by state 2023.
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $740
Since January 2021, the cost of commodities in Nebraska has increased by 16.5%. In November 2022, the state’s food inflation costs were recorded to be around $118. According to JEC, the state's current unemployment rate is 2.3%, while the core CPI Inflation stands at around 4.0%.
24. Georgia
Percentage Increase in Prices Since January 2021: 13.0%
Total Inflation Costs: $745
Ranked at number 24, Georgia has experienced a 13.0% increase in commodity prices since January 2021. The state's consumer price index indicates the most significant increase in commodities within the non-alcoholic beverages, food, and transportation categories.
23. South Dakota
Percentage Increase In Prices Since January 2021: 13.6%
Total Inflation Costs: $747
According to Forbes, the average monthly utility cost in the state is about $408, and the average home value stands around $284,308 based on the Zillow Home Value Index.
22. North Dakota
Percentage Increase in Prices Since January 2021: 13.6%
Total Inflation Costs: $748
North Dakota has a total inflation cost of around $748. The Bureau of Labor Statistics reports an unemployment rate of 1.9% in the state as of October 2023, with the top industries being finance, insurance, and real estate.
21. New Hampshire
Percentage Increase in Prices Since January 2021: 12.0%
Total Inflation Costs: $772
Following on the list is New Hampshire, with a total inflation cost of $772, including $99 for food and $247 for transportation. In comparison to January 2022, the Business Review reported a 1.5% increase in the average hourly wage of employees in the state in January 2023.
20. New Mexico
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $772
New Mexico, known for its diversified economy, has an energy inflation of $136, as per the JEC report.
19. Connecticut
Percentage Increase in Prices Since January 2021: 15.1%
Total Inflation Costs: $775
Continuing down the list is Connecticut, where the cost trend for food and energy exhibits fluctuations. The state has recorded a 15.1% increase in prices since January 2021. The shelter inflation cost of $94 in Connecticut is considerably lower than the figures calculated for other states.
18. Illinois
Percentage Increase in Prices Since January 2021: 14.1%
Total Inflation Costs: $790
Illinois has secured the eighteenth position on our list of the 25 states with highest inflation rates in the US. The transportation inflation cost is particularly high in the state at $296, while the overall inflation cost is $790.
17. Virginia
Percentage Increase in Prices Since January 2021: 15.1%
Total Inflation Costs: $802
As per the JEC report, the total inflation cost in the state is $802, and there has been an increase of 15.1% in prices since 2021.
16. Hawaii
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $802
According to Dwell Hawaii, for a comfortable living with access to all possible amenities, an individual must earn approximately $70,000 to $100,000 annually. While this is comparatively reasonable compared to other states, the total inflation cost in Hawaii stands at $802.
15. Massachusetts
Percentage Increase in Prices Since January 2021: 14.1%
Total Inflation Costs: $816
Over the last few years, housing has become expensive in Massachusetts. Health insurance, groceries, and gas costs are also on the rise. According to JEC, the state has observed a rise of around 14.1% in prices since January 2021.
14. Minnesota
Percentage Increase In Prices Since January 2021: 13.1%
Total Inflation Costs: $818
With a total inflation cost of $818, Minnesota is at the fourteenth position on our list of states with highest inflation rates in the US.
13. Idaho
Percentage Increase in Prices Since January 2021: 14.1%
Total Inflation Costs: $819
Idaho holds the distinction of being the nation's leading potato producer. Since January 2021, the state has recorded an increase in prices of around 14.1%.
12. Delaware
Percentage Increase in Prices Since January 2021: 15.1%
Total Inflation Costs: $812
The food inflation cost in the state is approximately $102, and the shelter inflation cost is around $162.
11. Alaska
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $826
Alaska recorded a $223 transportation inflation cost. The majority of employment in this state is within the traditional basic industries category. In general, Alaska has experienced an overall increase of 16.5% in prices since 2021.
10. California
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $829
California is at the tenth position on our list of the 25 states with the highest inflation rates in the US. According to JEC, it has showcased a 16.5% increase in prices since January 2021.
9. Maryland
Percentage Increase in Prices Since January 2021: 12.0%
Total Inflation Costs: $838
Maryland’s diversified economy is quite sturdy, with most of its residents involved in agriculture. The total inflation cost of this state is around $838.
8. Montana
Percentage Increase in Prices Since January 2021: 13.6%
Total Inflation Costs: $846
Montana's three important and thriving industries are tourism, mining, and agriculture. Energy is still affordable in the state. However, the cost of housing has increased since January 2021.
7. Florida
Percentage Increase in Prices Since January 2021: 15.1%
Total Inflation Costs: $848
Florida holds the seventh position on our list of states with the highest inflation rates in the US. In recent years, transportation inflation in Florida has particularly risen, reaching $270. The overall inflation cost in the state is recorded at around $848.
6. Wyoming
Percentage Increase in Prices Since January 2021: 16.5%
Total Inflation Costs: $871
Wyoming has a total inflation cost of around $871, with a relatively lower food inflation cost standing at $111.
In addition to low inflation rates, the presence of companies like Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL) is also a factor that attracts individuals to a particular state.
