South Florida inflation rate is largest in nation

By Harriet Johnson Brackey

South Florida Sun-Sentinel

March 15, 2008

As if the struggling economy weren't enough to bear, consumers in the Miami- Fort Lauderdale metropolitan area saw prices skyrocket at the fastest pace of any metro area in the nation in February.

Consumer prices rose at a 5.3 percent annual rate in the Miami-Fort Lauderdale area last month, the federal Bureau of Labor Statistics reported Friday. That puts the local rate higher than the inflation rate in major cities like New York (3.6 percent), Los Angeles (3.1 percent) and Chicago (4.4 percent). And it's significantly higher than the nation's rate, too.

The South Florida consumer inflation rate has led metro areas across the country since last year.

Nationwide, consumer prices in February were 4 percent higher than the year before, according to the Bureau of Labor Statistics. After a seasonal adjustment, consumer prices were virtually unchanged last month, better than the expected 0.3 percent gain.

But that's not expected to last.

Consumer inflation, after pushing relentlessly higher, posted its mildest reading in six months, thanks to energy and food costs moderating. The relief, however, was expected to be short-lived, given that energy prices have resumed their upward climb.

David Wyss, chief economist at Standard & Poor's in New York, said that he thinks the economy is in a recession, which will help ease pressures on prices. But he said offsetting that in part is the big decline in the value of the dollar, which is driving up the cost of imported goods.

Wyss predicted a big jump in consumer prices for March, reflecting the rebound in gasoline and other energy prices that has already occurred. Crude oil hit a record high this week above $110 per barrel and gasoline pump prices jumped to a national record of $3.28.

The bureau of labor statistics measures inflation nationwide every month. Ten times a year, it also releases local inflation figures for major metropolitan areas.

Its South Florida figure includes Broward and Miami-Dade counties, but does not measure inflation in Palm Beach County. However, costs are similar across South Florida.

Meanwhile, the question on economic analysts' mind is what February's low nationwide inflation rate will mean to Federal Reserve policy makers.

Many private analysts think the Fed Reserve will cut rates by as much as one-half to three-fourths of a percentage point when it meets next week, seeking to prevent a full-blown recession or at least moderate its effects.