Minneapolis and Honolulu became the first major US cities to see inflation fall back in line with the Federal Reserve’s national target since the pandemic price surge began in 2021.
Prices in Minneapolis rose just 1.8% in the 12 months through May, while in urban Hawaii the figure was 2%, according to the Bureau of Labor Statistics. Both regions saw big drop-offs in the cost of household energy and motor fuel.
The Fed’s inflation target is 2%, though it uses a different price gauge that’s not directly comparable to the BLS numbers. Still, the data published Tuesday show a cooling of inflation across the US. The nationwide annual rate eased to 4%, the lowest level since March 2021. Investors stepped up bets that Fed officials, who’ve been raising interest rates for more than a year to rein in prices, will pause their run of hikes when they meet this week.
Some of the biggest US cities have seen sharp price slowdowns. In New York City, the largest metro area, the inflation rate dropped to 3.5%, down from a post pandemic peak of 6.7% in June 2022. The swing was even bigger in Los Angeles and Chicago — which both had rates of 8.5% or higher at the peak, and now have inflation of somewhat above 3%.
American inflation hotspots remain, especially in parts of the Sun Belt — although even there, there’s been a marked easing from rates that ran as high as 13% last summer.
Tampa, Florida — which has been at or near the top of the national inflation league for more than two years — still had the highest rate among large cities last month, at 7.3%.
The government tracks prices in 23 metro areas, with New York, Los Angeles and Chicago reporting inflation every month and the other cities alternating every other month.
