While the nation’s economy continues to make slow progress on the road toward recovery after it was wrecked during the COVID-19 pandemic, Florida finds itself lagging behind.
Inflation in the U.S. reached the lowest point its seen since early 2021, after seeing 12 consecutive months of decline, hitting 3% in June, according to the latest report from the U.S. Bureau of Labor Statistics. Florida, however, saw consumer inflation hit 6.9% in the Miami, Fort Lauderdale and West Palm Beach areas.
The national inflation rate shrank thanks to lower prices for gasoline, airline fares and used cars. Florida reaped the benefits from similar declines, with the price of used cars seeing a 6% decrease and gasoline prices dropping an average of 28.6%, year over year.
Determining exactly why Florida’s inflation rate requires more context than what’s available in the BLS report, however.
How does inflation in Florida impact the cost of living in Pensacola?
The BLS does not provide inflation data specific to Pensacola but does report on the Pensacola-Ferry Pass-Brent metropolitan area’s wages. Pensacola workers on average earned an hourly wage of $24.37 in May of last year, which is 18% less than the national average of $29.76.
Pensacola’s cost of living is 6% lower than the state average and 5% lower than the national average, according to data from The Cost of Living Index published by the Council for Community and Economic Research.
On average, housing expenses are 9% lower than the national average, groceries are 2% lower and transportation is 9% lower. Utilities, however, are 17% higher in Pensacola than the nationwide average.
This data shows a disproportionate gap between the average hourly wage and cost of living in Pensacola compared to the rest of the nation. The 18% wage gap doesn’t make up for the 5% difference in cost of living.
That gap is likely due to the fact that Pensacola jobs are heavily concentrated in nine of 22 occupational groups the BLS tracks, most notably in food preparation, serving, sales and health care practitioners while representation among the remaining 12 groups falls significantly below the national average. These groups include production, transportation and management.
Pensacola had 21,350 jobs in food preparation and serving related categories, accounting for 11.8% of the local area employment, which was higher than the 8.5% share nationally. The average hourly wage for this occupational group locally was $14.01, below the national wage of $15.45.
Some of the larger detailed occupations within the food preparation and serving related group included fast food and counter workers (5,530) and servers (4,430). Among the higher-paying jobs in this group were chefs, head cooks and first-line supervisors of food preparation and serving workers, with mean hourly wages of $24.34 and $18.38, respectively. At the lower end of the wage scale were fast food and counter workers ($11.78) and dishwashers ($12.09).
Why is Florida’s inflation so high?
It’s important to note that the latest BLS report only looked at three metropolitan areas: Atlanta-Sandy Springs-Roswell, Georgia, Miami-Fort-Lauderdale-West Palm Beach and Tampa-St. Petersburg-Clearwater. It should also be noted that the Tampa area data is only as recent as May, where it saw a 7.3% inflation rate.
Shelter, which includes the cost of rent and owner’s equivalent rent, was the biggest contributing factor to all monthly items increase across the U.S., seeing a 7.8% increase since last year. In Florida, shelter costs are up 16%, begging the question — why?
Florida’s insurance crisis
Florida’s worsening insurance crisis is the first, obvious, answer. Florida has the highest insurance rates in the U.S., rising 42% just in the last year and a staggering 206% since Gov. Ron DeSantis took office in 2018, according to Yahoo! Finance.
Homeowners hoping for a reprieve aren’t likely to see one any time soon as Farmers Insurance announced that it would no longer write policies in the state and as state-backed Citizens Insurance, Florida’s largest insurer, seeks a 13.3% rate hike in an effort to kick policyholders back into the private market.
Florida is the fastest-growing state
Skyrocketing insurance premiums aren’t the only contributing factor either. Last year, Florida became the fastest-growing state for the first time since 1957, with a population increase of almost 2% from July 2021 to July 2022.
The population boom experience during the tail-end of the COVID-19 pandemic compounded Florida’s already limited housing inventory as people took advantage of low-interest rates to purchase their first house or refinance their home.
Florida’s home inventory has since rebounded, with active listings in May up 46.7% over last year, home sales have slowed, according to data from Florida Realtors. May saw an 8.5% decrease in the number of total sales and a 92.9% increase in the month’s supply of inventory, which is an estimate of the number of months it will take to deplete the current inventory given recent sales rates.
Higher interest rates
According to data from the Florida Department of Financial Services, interest rates in Florida have risen by about 3.44% since July 2021. During the pandemic, buyers could offset rising real estate costs with low interest rates. Buyers today don’t have the same luxury. The median home price in Florida in April was $410,000, according to Florida Realtors, higher than the $388,000 national average.
Source : PNJ
