Inflation nearly flat in metro Phoenix while US prices continue to climb

Article originally posted on AZ Central on July 15, 2025

While U.S. prices rose 2.7% over the 12 months through June and inflation remains a concern, especially with higher tariffs kicking in, inflation has all but evaporated in metro Phoenix.

Nationally, inflation ticked up from a 2.4% rise over the 12 months through May. Many economists expected a bigger jump given that higher tariffs are starting to kick in or will soon.

“The most likely bet here is we are seeing a lull before the storm, with the effects of tariffs still ahead of us,” said Lee McPheters, a research professor at Arizona State University.

But Phoenix is going in the opposite direction.

Consumer prices rose just 0.2% across the Valley over the 12 months through June, easily the lowest inflation rate of 23 urban areas tracked by the Bureau of Labor Statistics.

Dallas had a 0.6% inflation rate for the 12 months through May, and Detroit was at 1.3% through June. The federal agency tracks most cities every two months, reporting on some, including Phoenix, in even-numbered months and the others in odd months.

Recent declines in gasoline prices have been a factor in tamping down inflation, both locally and nationally. Gas prices have tumbled 7.1% in metro Phoenix over the past year, the BLS reported. Another key influence: housing costs eased 0.5% over those 12 months.

In addition, apparel prices declined 4% over the past year around the Valley, and prices for alcoholic beverages slipped 3.2%. However, other beverages jumped 13.2%, while overall food costs were up 3.4%. Used-vehicle prices rose 5.9%, while new vehicle prices were basically flat, up just 0.3% over the past year.

The Phoenix inflation report is “good news for now, although consumers might not see it that way,” with food prices rising, said McPheters, director of the Economic Outlook Center in ASU’s W.P. Carey School of Business. The drop in apparel prices might reflect businesses stocking up on inventory before tariffs bite later this year, he added.

The latest national numbers reveal “an ongoing benign response to the tariffs so far,” wrote Kathy Bostjancic, Nationwide’s chief economist, in a quick inflation commentary.

While tariffs haven’t materially affected inflation so far, “We should expect some further pressure in the coming months,” cautioned Jeffrey Roach, chief economist at LPL Financial.

Various supermarket trends bear watching in coming months, as prices on scores of food items could be pushed up by tariffs. On July 14, the government announced new 17% tariffs on tomatoes grown in Mexico, which accounts for 70% of all the tomatoes sold in the U.S.

Coinciding with the low Phoenix inflation rate, the labor market here has stalled, with Arizona now ranked among the states where job growth has weakened the most.

During stretches of 2022, metro Phoenix briefly had the nation’s hottest inflation rate, topping out at 12.3% over the 12 months through June of that year. But price pressures have cooled consistently since then.

With national inflation still running higher than the Federal Reserve would like, economists do not expect any near-term interest-rate cuts.

That decision is complicated by the threat of new tariffs coming from President Trump and their possible impact on inflation, Bostjancic said. The central bank has been targeting a 2% inflation goal.

Americans generally say it takes about $839,000 in net worth on average to feel “financially comfortable” these days, up from $778,000 in 2024, according to a recent survey by Charles Schwab.

Roughly three in four respondents blamed that at least in part on inflation. Net worth reflects assets minus debts and isn’t directly connected to income.