US South and Midwest regional inflation runs hotter than rest
Headline CPI inflation rose 5.4% y/y in July 2021, but regional inflation is uneven, with prices up 5.9% y/y in the Midwest and 5.8% y/y in the South on the high end and 5.2% y/y in the West and 4.3% y/y in the Northeast on the low end. Supply-side constraints are raising prices, and stronger base effects, lesser economic slack, and tighter labor markets underpin comparatively higher inflation readings in the South and Midwest. Our recovery trackers confirm the South and Midwest led the recovery in H1 2021.
What you will learn:
- Regional inflation disparities narrows modestly excluding food and energy, but core CPI inflation is hotter in the South (+4.8% y/y) and Midwest (+4.6% y/y) than the West (+3.9% y/y) and Northeast (3.5% y/y) – this despite core inflation historically running coolest in the South and Midwest.
- Goods inflation was strongest in the Midwest (+9.6% y/y) and South (+9.5% y/y) in July, outpacing the 9.2% national increase. These regions account for about 60% of the rise in national goods prices since the crisis began, but they represent only half of national consumer outlays.
- We look for gradually unwinding supply-side constraints and moderating demand growth to temper regional price pressures in coming quarters. But substantial constraints in pandemic-stricken supply chains and labor markets risk keeping regional inflation higher for longer than we expect.
Tags:
Related Services

Post
Japan’s tariff turbulence to flatten near-term growth
We've cut our GDP growth forecasts for Japan by 0.2ppts to 0.8% in 2025 and by 0.4ppts to 0.2% in 2026, reflecting higher US tariffs and heightened global trade policy uncertainty. We now forecast that Japan's economy will barely grow over 2025-2026 on a sequential basis.
Find Out More
Post
Growth outlook cut further for the Eurozone amid tariff turmoil
Given the unique nature of the hike in US tariffs, the size of these supply and demand shocks and the speed at which they are arriving make the precise economic implications particularly hard to pin down. Overall, however, we expect GDP growth in the US and world economy to slow sharply, but we don't anticipate recessions in either.
Find Out More