(The Center Square) – A new report found Phoenix’s inflation rate increased over the last four months.
Common Sense Institute Arizona released a report earlier in January showing that Phoenix’s inflation increased from 1.4% in August to 2.2% in December.
Zachary Milne, a senior economist for CSI Arizona, told The Center Square the main drivers of the inflation increase were energy and medical costs. The Bureau of Labor Statistics reported that energy costs rose 4.2% from December 2024 to December 2025, while medical costs rose 7.4% over the same period.
Despite this increase in inflation, Milne said people shouldn’t view it as a huge spike but rather as inflation returning to normal levels in the city.
Compared to the national inflation rate in December, Phoenix’s inflation rate ranks 0.5 percentage point below it.
Milne said the cost of shelter is “depressing inflation” rates in Phoenix, compared to a couple of years ago, when it was one of the main drivers of it. The report said shelter prices were below 1% from February 2025 to December 2025.
The CSI report found Phoenix’s inflation rate increased by 29% from December 2019 to December 2025, resulting in average monthly Arizona household costs rising by $1,441.
Milne noted Phoenix had an inflation rate about 3% higher than the national rate during this period.
Shelter costs led to higher inflation in Phoenix during this period, the senior economist stated.
When shelter costs are not factored in, Phoenix’s inflation grew only 21.4% compared to the national average of 23.5%, he explained.
According to Zillow, the average cost of a Phoenix home in December 2019 was $264,568. Six years later, an average Phoenix home cost $402,796. This shows Phoenix home prices have increased by $138,228, totaling a 52% increase in the average home price.
Phoenix has the eighth-lowest inflation for metro areas in America, the CSI report showed. It noted this is a change from 2022-2023, when the city had one of America’s highest rates.
In 2022, Phoenix’s inflation was 11.5%, and one year later it fell to 5.2%.
Going forward, Milne said he expects Phoenix’s inflation to remain around 2%.
