(The Center Square) – The price of housing in the Rocky Mountain West in 2022 significantly contributed to inflation higher than the national rate, according to a report by the Federal Reserve Bank of Kansas City.
As inflation hit 9.1% in June 2022 throughout the nation, it climbed to 10.4% in the Rocky Mountain West, the Rocky Mountain Economist reported. As the national inflation descended to 4% in May, it was 5% in the mountain region.
In addition to shelter, prices of the household essentials of food and energy drove inflation higher and kept it elevated in the region.
“As price growth has shifted away from discretionary items, households faced greater difficulty paying for their typical household expenses,” the report said. “Inflation Hit Higher Peaks in the Rocky Mountain Region, But Is Following the National Descent,” stated. “Yet, the trajectory of inflation continues to move downward, even among non-discretionary categories.”
The price for renting and buying houses in Rocky Mountain states was typically higher than the national rate during the last decade.
“Throughout 2022, the cost of shelter was rising by 5.9% nationally but was nearly five percentage points higher in the mountain region,” the KC Fed stated. “Colorado, New Mexico and Wyoming all experienced outsized increases in the cost of housing.”
Excess growth in housing prices has fallen to approximately one percentage point in the region as the increases slowed during the first half of this year.
Smaller cities in the Rocky Mountain region had higher shelter inflation. The towns of Glenwood Springs and Grand Junction in Colorado, along with Santa Fe, New Mexico, attracted urban professionals who could work remotely. Annual growth in housing prices in Glenwood Springs rose nearly 30% in April 2022. But as the migration flow from larger metropolitan areas slowed and interest rates rose, housing price growth declined between 10 and 15 percentage points, the report said.
Increases in rent declined or stagnated in 2020 in many larger coastal cities, along with Denver, Albuquerque and Phoenix. However, the declines were smaller in the Rocky Mountain region and the rebound in rents in 2021 and 2022 was higher than many large coastal cities.
“Over the past several months, these gaps have dissipated, and growth in rents has slowed broadly in larger metro areas,” the report said.
While the rest of the nation experienced approximately 13.5% inflation for food, grocery prices in the mountain region peaked at 1.5% above the national average in January.
“The low population density, large distances from food production hubs and transportation infrastructure across the region make food distribution and shipping costs more expensive for the mountain region,” the report stated. “As food production and distribution challenges emerged everywhere last year, they led to even faster cost and price growth in the Rocky Mountain region.”
The Federal Reserve Bank of Kansas City covers western Missouri, Colorado, Kansas, Nebraska, northern New Mexico, Oklahoma and Wyoming.
