Inflation jumped to 3.7 percent in August on an annual basis, once again demonstrating the stubbornness of high prices in the U.S.
That number has dropped off from the record highs of last year, which prompted the Federal Reserve to institute aggressive rate hikes to bring inflation down. But while policymakers have managed to bring price rises down to less than 4 percent, inflation remains well above the central bank's 2 percent target.
Inflation doesn't hit all of America equally. Different cities are feeling the pinch of high prices differently, an analysis by personal finance platform WalletHub shows.
Miami and Tampa, two of Florida's two big cities, are struggling mightily with inflation. Miami's rate at 7.8 percent is more than double the national figure. Tampa's inflation rate hit nearly 6 percent, tied with Detroit.
At the other end of the spectrum, Minneapolis saw the lowest inflation rate in August at 1 percent with Washington D.C. at nearly 2 percent.
Analysts who spoke with WalletHub contend that with inflation stubbornly sticking above that 2 percent target, the Fed is likely to retain a high interest rate environment with implications for the housing market and the pocketbooks of Americans.
But should the Fed continue to keep rates high—currently in the 5.25-5.5 percent range—until it achieves its 2 percent inflation target?
"I do suspect it will be possible to maintain an economy with 2.5 to 3% inflation in the coming years," Brian Wheaton, an assistant professor of Global Economics and Management at the UCLA Anderson School of Management, told WalletHub.
"My personal view would be that if the Fed sees inflation settling around 2.5% in the mid-2020s and chooses to take further action to force it down to the 1.5-2% range, that would be misguided."
Lack of Supply Drives Housing Costs Up
Rick McGahey, a senior fellow at the Schwartz Center for Economic Policy Analysis at The New School in New York City, said a long-term lack of supply, combined with high interest rates, was driving housing costs up.
"We need more housing supply across the board, although it will take a while for new production to substantially lower costs, especially given the Fed's high-interest rates," he said.
While the fear that the Fed's actions in trying to tame inflation might spark an economic recession, the U.S. has been quite resilient thus far.
"Although higher interest rates can discourage investment and hurt the economy, as of now, the interest rate spike does not seem to be provoking a recession," said Nazneen Ahmad, a professor of economics at Weber State University.
