States hit the hardest as inflation reaches 40-year high (2024)

FAQs

What states are hardest hit by inflation? ›

The most impacted states, however, were California and New York, which suffered from a potent combination of decreasing wages (when adjusted for inflation) and large price increases from 2021 to 2022. Household budgetary distress, while not quite as high as in the South, was relatively high in both states as well.

America's worst inflation on record occurred during and after World War I, when the price of just about everything—food, clothing, household goods—more than doubled. The largest single-year price increase during the post-World War I era was 23.7 percent from June 1919 to June 1920.

Year-over-year CPI inflation hit a 40-year high of 9.1% back in June 2022. After trending lower throughout the second half of 2022 and the first half of 2023, the Federal Reserve's progress on inflation has slowed significantly in the past year.

The difference in the composition of assets across the wealth distribution creates an uneven net inflation effect. Accounting for these undesirable interactions shows that inflation hits poorest Americans the hardest, acting as a silent tax on those least able to pay it.

Where is inflation the highest and lowest? See if your state made the list. The five states with the fastest inflation: 1. Florida, 12-month inflation: 3.9% - Americans have streamed into the Sunshine State since the pandemic for its warm weather, beaches and lower costs, especially compared to the Northeast.

Inflationary oil supply shocks tend to hurt the least affluent by more than the most affluent. Inflationary monetary shocks do the opposite: They hurt the most affluent more than the least affluent.

The highest inflation in U.S. history was in 1917 when annual inflation reached a rate of 17.84%. The inflation rate of the following three years, from 1918 to 1920, rounded out the top four years with the highest rates in U.S. inflation rate history.

The 12.5-percent increase in prices in 1980 was, like that in 1979, due primarily to increases in the food, shelter, and energy components, which accounted for more than two-thirds of the 1980 rise in the overall CPI.

While the last 10 years have seen below-average inflation rates, the 20th century has seen periods of extreme inflation and deflation, including the Great Depression that began in 1929 and the Great Inflation that began in the mid-1960s and didn't break until the mid-1980s.

Inflation is influenced by a wide range of complex factors. A president's actions in office can play a role in affecting it. Defined as a rise in prices, inflation is generally among the top concerns for consumers, as it makes everyday expenses such as gas, groceries, and utilities more expensive.

What is causing inflation in the US? ›

Inflation may occur due to increases in production costs associated with raw materials or labor. Higher demand can also lead to inflation. Certain fiscal and monetary policies such as tax cuts or lower interest rates are also potential drivers.

Our base case is that inflation will return to normal in the second half of 2024, even as real GDP growth remains positive in year-over-year terms. This is referred to by economists as a “soft landing.” Over the past year, inflation has fallen around 300 basis points even as real GDP growth has accelerated.

Inflation can have varying effects on different wealth brackets with the middle class benefiting from real estate assets, but facing challenges in other areas. The "wealth effect" benefits those with substantial assets from increased asset values, like stocks, real estate and entrepreneurial endeavors.

Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed, which benefits borrowers.

New England was hit especially hard by inflation in 2022. New Hampshire had the highest inflation in the country, 11.8 percent. Maine, Connecticut, Arizona, and Oregon were next. The state with the least inflation was Alaska, just 3.6 percent, followed by Arkansas, North Dakota, Nebraska, and South Dakota.

But one need not look to history to find examples of hyperinflation: Zimbabwe has been struggling with spiraling inflation for over a decade; Venezuela—the IMF estimates—will hit this year an inflation rate of 250% (which, believe it or not, is a stellar improvement compared to the five-digits rates of some years ago); ...

Hawaii is the State with the Highest Cost of Living

The sunny state of Hawaii is the most expensive state to live in, with an average annual cost of living of $55,491. Despite having the highest cost of living ($55,491), Hawaii also has the lowest annual average salary ($61,420) among these 10 states.

At 3.99%, Florida is only a few tenths-of-a-point from the top, nearly tied with California and a half-point higher than Texas. READ: Why are food prices so high despite inflation falling? Florida now has nearly 200,000 more people than it did last year.