Inflation is on the rise at a historic pace in the United States. The consumer price index surged 7.5% on an annual basis in January 2022, the highest increase in about 40 years. While wages have also climbed, they have not increased enough to offset rising prices for the typical American worker.
Inflation is being driven in large part by supply chain disruptions, which are limiting production capacity and the availability of certain goods and ultimately leading to higher prices. Pent-up consumer demand in the wake of COVID-19 shutdowns across the globe is exacerbating the problem. Recently, consumers have been feeling the pinch, particularly through higher food, housing, and energy prices.
While consumers across the country are paying more for goods and services now than they were a year ago, exactly how much they are paying depends largely on where they live, as some states have a far higher cost of living than others.
Using data from the Composite Cost of Living Index published by the Missouri Economic Research and Information Center, 24/7 Wall St. identified the cost of living in every state. States are ranked on their cost of living relative to the national average from lowest to highest. It is important to note that this index reflects the annual average cost of living in 2021 and does not account for recent price increases due to inflation.
Of the five specific consumer categories factored in the index – groceries, housing, utilities, transportation, and health care – housing appears to have an outsized impact on overall cost of living. In each of the five states with the highest overall cost of living, housing is the most expensive consumer category, with housing costs ranging anywhere from 73% to 215% more expensive than average. Meanwhile, in each of the 20 states with the lowest cost of living, housing ranks as the least expensive consumer category. Here is a look at the most expensive town to buy a home in every state.
Incomes tend to reflect differences in cost of living at the state level. In each of the 10 states with the lowest cost of living, the median household income is below the $65,712 national median, according to the U.S. Census Bureau’s American Community Survey. Similarly, median incomes are higher than average in nine of the 10 states with the highest cost of living. Here is a look at the income it takes to be middle class in each state.
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