Metro Phoenix inflation rate among nation’s lowest in 2023

Published: Thursday, January 11, 2024 - 3:00pm

New data reveals the Valley’s inflation rate for last year was among the lowest in the country at 2.7%. Nationally, the rate was 3.4%.

The information from the U.S. Bureau of Labor Statistics was released Thursday just before the Greater Phoenix Economic Council (GPEC) hosted a webinar about the 2024 outlook.

“One thing I want to note is we got to a 13% inflation rate here in greater Phoenix. The national economy peaked at around 9%, so we were exceeding that a lot and that was driven by housing and things like that, but the interesting thing is we’ve fallen off faster than the U.S.,” said Kristen Stephenson, senior vice president, research and analytics for GPEC.

After years of higher spending, inflation and wages, the Valley’s economic growth is expected to slow in 2024. Slower does not mean unhealthy, according to Stephenson.

“I think with the inflow of people, we’ll continue to see our economy be a little bit stronger than the U.S. However, I do think we’ll see much more moderate growth than what we’ve seen in the last few years,” she said.

Arizona is adding jobs more consistent with a pre-pandemic pace. Doug Walls, economic research administrator with the state’s office of economic opportunity, said the health care sector continues to grow and, more recently, the government sector has been filling positions.

“That was one of the industries that had kind of been pushed aside and was not able to compete with some of the offers from the private sector,” he said. “The private sector hiring has cooled off a bit and that did give the opportunity to the government sector to begin hiring and refilling some of the jobs that had been lost during the pandemic," Walls said. 

When mortgage rates come down, Walls expects homeowners who’ve been locked into low rates, will be more willing to sell. The Federal Reserve has signaled it will begin cutting rates this year. 

Arizona labor highlights comparing 2022 to 2023 as provided by Arizona Office of Economic Opportunity

  • Arizona NSA nonfarm employment increased by 60,000 jobs (1.9%)
  • Arizona private sector employment increased by 47,000 jobs (1.7%), while government employment increased by 13,000 jobs (3.0%)
  • Eight of the 11 major sectors recorded job gains

- The largest gains were recorded in Private Education and Health Services* (21,800 jobs) and Government (13,000 jobs)

- Losses were recorded in Other Services (-4,000 jobs), Information (-2,800 jobs), and Manufacturing (-1,400 jobs) 

  • Six of the seven Arizona metro areas (MSAs) gained jobs

- The largest percentage gains were recorded in Yuma MSA (2.0%) and Phoenix-Mesa-Scottsdale MSA (1.9%) 

- Losses were recorded in Lake Havasu City-Kingman MSA (-0.7%)

*The previously titled Education and Health Services sector was renamed to the Private Education and Health Services. Employment as previously defined for this industry did not change.