Impact of Inflation in Tampa Bay
How Inflation is Affecting Tampa Bay Area Residents
In June of this year, America saw its highest level of inflation in 40 years. The Federal Reserve has taken action to stymie inflation by raising interest rates, and we are beginning to see positive results. Inflation has trended downward the past few months, but the effects are still being felt by consumers. While the Federal Reserve will continue interest rate hikes to bring inflation closer to the goal of around 2%, it is unclear how quickly and to what extent further action will be effective. For that reason, it is both imperative and urgent to have your own strategy in place for protecting the value of your money.
While national inflation reached a 40-year high in June, specific areas of the country have been hit harder than others. One of the drivers of inflation is increased demand of products and services. Tampa continues to see large numbers of people move to the area—over 9,000 people in the first two months of 2022, alone— so it is no surprise that Tampa has the third highest inflation rate of 23 major metropolitan US cities.
As of Q2, 2022, the Tampa Bay area has seen year-over-year wage growth of 3.8%. Unfortunately, that is nowhere near the 11.2% inflation we have seen in the same time span. That means that for your average Tampa resident, the value of your dollar has actually decreased by 7.4%. Although your wage may have increased, you’re able to buy less with your money than you could last year. Having to spend more on gas, groceries, and utilities forces residents to pull back on discretionary spending. We are already seeing evidence of this. Even though—as I mentioned before—the number of consumers in the area has increased, the International Plaza and Bay Street mall in Tampa reported an 8.26% decrease in shoppers during the month of July as compared to last year. Decreased consumer spending means decreased revenue for Tampa’s small businesses.
The rising costs of goods and services is not the only concern for Tampa Bay residents. The median listing home price in Tampa is 21.4% higher this year than it was at this time a year ago. With discretionary spending already squeezed by inflation, new home buyers and renters may struggle to find the extra money needed for higher mortgage and rent payments. Existing homeowners may feel the effects of inflation in other ways. Even with fixed mortgage rates and monthly payments, you can expect routine home and yard maintenance, upgrades, and renovations to be more expensive than in recent memory, as the cost of supplies and materials increase. For the same reasons, hiring a contractor is likely to cost you more as well.
Regardless of your financial circumstances, inflation is going to impact your life in one way or another. With inflation decreasing the value of your dollar coupled with current market volatility, it is more important than ever to have a plan in place that will keep you on track to meet your short- and long-term financial goals. The good news is that you don’t have to navigate these uncertain times alone. Our firm provides affordable, comprehensive financial planning with one goal in mind: to make a difference in the lives of those we work with.