What is Inflation?
No matter your location, industry, or occupation, there has been a topic that has been looming over all of us for some time now: inflation. With its impacts reaching both our professional and personal lives, it is important to know what it is, where we currently stand, and what it all means to the Charlotte Region.
In simple terms, according to McKinsey & Company: “Inflation refers to a broad rise in the prices of goods and services across the economy over time, eroding purchasing power for both consumers and businesses.” Essentially your dollar doesn’t get you as far as it once did.
How do we measure Inflation?
The Bureau of Labor Statistics (BLS) publishes a Consumer Price Index (CPI), which looks at the cost of living for the average person in a given region. The CPI includes expenditure items like food and beverages, housing, transportation, energy, and more in its calculation. Comparisons of CPI from one point in time to another illustrate rates of inflation.
An additional CPI measure is Core CPI. This measure excludes food and energy prices from its calculations which can often be the most volatile. The Core CPI can often paint a more accurate picture of underlying inflation trends.
Source: BLS CPI, CLT Alliance Analysis, 2023 |*Full data on Economic Indicators interactive dashboard
What it means for the Charlotte Region?
Nestled in the BLS’s South Atlantic region, the Charlotte Region has been no stranger to surging inflation rates over the past 24 months. The South Atlantic Region has routinely seen higher inflation rates when compared to the nation. Considering the region is made up of some of the fastest growing southern states, inflation can be an expected outcome. With more people comes more demand. Additionally, the south is home to several of the hottest housing markets in the country, with the Charlotte Region being a key driving market. However, the data has begun to show a cooling of these historically high inflation rates, with steady decreases in Year-Over-Year South Atlantic Core CPI Rates since September. A reduction in inflation to the Charlotte Region could mean an ease in housing, food, transportation, and other costs for our most at need residents.
What’s next?
The cooling of these inflation rates is, of course, no accident, with the Federal Reserve implementing typical inflation-fighting strategies. Inflation-fighting strategies, however, are a tightrope between reducing higher costs and pushing the economy into recession. With a low number of unemployed across the region and a strong labor market the Charlotte Region is better equipped than most to deal with a potential recession. Yet, much like high inflation, there are real human costs to a recession.
It’s up to economic development and business community leaders in the Charlotte Region to continue to drive the economy. Providing opportunities for the workforce to upskill can be a tool to help minimize the effects of both inflation and recession. A strong Charlotte Region must collaboratively tackle challenges to mitigate issues an ever-changing economy is sure to bring.
For a deeper dive into inflation measures and other economic indicators please visit the Economic Indicators Dashboard on the Charlotte Regional Business Alliance Get The Data page.
