Colorado’s official inflation rate doesn’t exist. That’s because the standard measure of inflation by the U.S. Bureau of Labor Statistics doesn’t have the budget to survey enough people in every state to figure out local inflation.
But the BLS does look at how the price of the same basket of goods has changed in the past for a handful of urban areas, including the Denver-Aurora-Lakewood metro area. And it tracks quadrants of the nation as well as nine census regions, like the mountain region, which includes Colorado, Arizona and Nevada.
Local economists are left to extrapolate Colorado’s rate based on what’s happening in Denver. And the latest price changes in Denver were up 5.1% in May from a year earlier, according to CPI. The Denver area had the third highest inflation rate for a metro region (the The Tampa, Fla., metro area had the highest at 7.3% and the San Diego area was second, at 5.2%). The U.S. rate was 4% in May. Denver’s rate has been higher than the U.S. for most of 2023.
For its big annual report of Colorado, the Leeds School of Business at the University of Colorado uses Denver’s number for the whole state, said Brian Lewandowski, executive director of the school’s Business Research Division.
This doesn’t mean others haven’t calculated inflation rates for all states — or even more locally. Here are a few:
- The Joint Economic Committee Republicans State Inflation Tracker relied on regional census data, so last fall Colorado was in an eight-way tie for the highest inflation rate nationwide. All states in the same region as Colorado — including Montana, Utah and Idaho — had the same state rate.
- Credit company Experian in January measured the states where “inflation is hitting the hardest.” Colorado, despite Denver having a pretty high rate, did not make the Top 10. Southern states, including Texas, were in the worst shape with the highest percentage of adults who said they couldn’t afford household expenses. >> Top 10
Rural is not the same as urban
And then there’s the population living outside of metro areas. The CPI emphasizes inflation in urban areas. For rural parts of America? Good luck!
“Trying to get stats on rural Colorado is nearly impossible,” said Stephan Weiler, professor of economics at Colorado State University who studies rural America.
Weiler co-authored a piece published in The Conversation earlier this year pointing out official inflation rates often skip over what’s happening in rural parts of the country, and that’s 14% of the U.S. population or around 46 million people.
The cost to live is inevitably higher outside metro areas as rural Americans spend more on gas, groceries, medical care and, well, nearly everything. Prices are higher because of the added cost to get goods and services to less populated regions. Longer drives mean more wear and tear on a vehicle, leading to replacing cars and trucks more frequently. And so on.
Some of this is just observation and there’s no conclusive official data. However, the piece concluded “a review of rural life and consumption habits suggests that rural Americans suffer more as the cost of living goes up.”
The closest data, he said, is the five-year estimates from the American Community Survey that looks at housing and utility expenses compared with income in cities and rural areas.
“But those are estimates. It’s not even an average, just five years worth of data and you’re supposed to make sense out of that. It’s a problem,” he said. “If you’re in a county, for instance, with a population greater than 65,000, then you get a one-year estimate. But the places that are suffering rarely have populations over 65,000. There’s a reason why those places are smaller and getting smaller. Those people are leaving for larger places. And for those digging around for data, it makes our job even harder.”
One way to measure rural inflation
Luke Petach, a former Ph.D. student of Weiler’s and now an assistant professor of economics at Belmont University in Nashville, is working on another way to analyze the rates of rural inflation. He looked at publicly available data from bank deposits.
Using what is known as the quantity equation, he calculates how much money is out there and how much of it is being spent. In other words, how many times is the same $1 spent in a year.
“If you have data on the quantity of money and on real income at the local level, you can use that equation to back out the implied rate of inflation,” he said. “I used data from the FDIC on deposits and local bank branches to estimate the quantity of money at the local level in the U.S. and combined that with the quantity equation to back out the implied rate of inflation.”
There’s data on an annual basis for about 3,000 counties in the U.S.
His working paper is on the methodology and not necessarily on proving that rural inflation is higher than urban areas. But, for most of Colorado, it is higher, even before last year’s run up in prices. The mean across Colorado’s rural counties was 5.7% in 2021, compared with Denver’s 4.5%.
The five counties with the highest inflation rate?
- Chaffee County, 10.4%
- Saguache County, 9.6%
- San Miguel County, 9.4%
- Arapahoe County, 9.1%
- Montrose County, 8.7%
“If we only think about addressing inflation as an urban phenomenon, we’re going to miss some of those people who are affected in rural areas and for whom we also want to think about policy solutions to inflation,” he said. “What’s the right policy response is the harder question. But I think the first step is being aware of the problem and making sure we’re not just focusing on urban areas when we’re talking about the consequences of inflation.”
Petach’s research is still a work in progress and will be up for peer review before it’s published.
➔ ICYMI: Denver’s May inflation rate: Still high but less so, at 5.1%
➔ More on rural inflation: Here are a few other reports on the topic from the Federal Reserve Bank of New York, Iowa State University
Readers share: Declining prices
In the latest What’s Working reader poll, readers shared how prices for some items have declined in the past year. Well, very few readers shared specifics. It became more of a poll to vent.
“Everything has increased, are you kidding?” one respondent said.
But as expected, folks have changed their habits to stay within budget. Less travel, bicycling instead of driving, and buying lower-priced items.
“Less organic, more bargain/sale items & food prep,” said Jennifer Kermode, from “Beautiful Downtown Gunnison.”
Kathy Owens from Indian Hills mentions her temporary savings on gas after purchasing an electric vehicle, “My car includes 3 years of free charging. I am no longer paying for gas and am charging for free!”
But the reminder that some prices were once higher had Brian Robinson from Poncha Springs commenting, “Short-term memory is a curious thing — I complain about $3.55/gallon gas, forgetting that last year at this time it was over $5 for a period of time.”
For what it’s worth, a gallon of gas in Colorado inched higher for the holiday week, at $3.69 for a gallon of regular gas on Friday, up 22 cents in the past month, but $1.22 less than a year ago, according to AAA’s gas tracker.
Take the poll: Summer money
Price fluctuations post pandemic mean that some things still cost more, but other items cost less than last summer, such as gasoline, lumber and eggs. Are you getting around to that backyard project or traveling more this summer? Take the latest What’s Working poll at cosun.co/WWSummerMoney and share a comment to help us better understand what’s going on in Colorado.
Other working bits
➔ Crested Butte electricians and mechanics unionize. Lift mechanics and electricians at the Crested Butte Mountain Resort voted 7-3 to form the Crested Butte Lift Maintenance Professional Union as part of CWA 7781, according to the union on June 30. Workers are seeking safer working conditions to cut down on high turnover. >> Earlier Sun story
- Union members at some Starbucks Colorado stores strike for LGBTQ+ causes and draw attention to stalled contract negotiations. >> Story
➔ Colorado ranked 2nd most independent state. What is independence if you’re a state? Researchers at WalletHub analyzed how dependent states were on their own resources and Colorado had an overall rank of second, thanks to high marks for the percent of jobs supported by exported goods and international trade. But we also had one of the highest rates of adult drug users (fourth), which along with gambling and alcohol ranked Colorado in the middle for “Vice Dependency.” >> Report
➔ Local small businesses managing rent hikes. Alignable, which tracks the business of being a small business, has found that many small businesses are late on paying rent. New Jersey had the highest rent delinquency rate in June, at 48%. But in Colorado? The state “broke records for being so low, indicating some degree of economic recovery,” according to Alignable. Still, Colorado’s rate was 11%. Overall, 55% of small businesses surveyed said their rent is higher than it was six months ago and 39% didn’t pay June rents in full on time. >> Report
Thanks for sticking with me for this week’s report. If you missed last week’s newsletter, you didn’t miss anything at all. What’s Working took the holiday week off. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
Miss a column? Catch up:
- What’s Working: What happened since Colorado invested in Colorado Springs as a cybersecurity hub
- What’s Working: Connecting Colorado’s latest economic reports on inflation, housing and jobs
- What’s Working: Colorado’s summer jobs are disappearing
- What’s Working: Where a company that develops cancer tests, other startups are finding funding in Colorado
- What’s Working: Welcome to summer 2023 travel season, as airlines and labor issues collide
- What’s Working: Colorado’s April job growth is the best in 12 months, but it’s slower than the nation’s
What’s Working is a Colorado Sun column about surviving in today’s economy. Email tamara@coloradosun.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww.
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