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August 09, 2017

Report: Philly's inflation is among lowest in urban America

Over the last decade, purchasing power remains strong compared to other metros

Economics Finance
Carroll - Philadelphia Skyline Buildings Thom Carroll/PhillyVoice

The Philadelphia skyline as seen from Martin Luther King Jr. Drive near Eakins Oval.

Pinning down the affordability of American cities means looking at more than their rental and housing markets, their salaries across industries and the municipal tax code. While these are considered the most influential factors that make up an area's cost of living, it's easy enough to fall asleep on the economy's invisible tax: inflation.

Even as some Philadelphians remain leery of high city wage taxes and the recently enacted soda tax, inflation is one problem that hasn't had as much of an impact as in other urban areas, according to new data released by SmartAsset.

In a nationwide study of inflation, cost of living change and income change, Philadelphia ranked at number 24 among the cities least affected by inflation in 2017. The study looked at data in the decade from 2006 to 2016, calculating cost of living by measuring the change in price for local baskets of goods in including milk, shampoo and rent. To determine each city's purchasing power, each city's per capita income was divided by the cost of living.

In Philadelphia, this graded out as a 25.5 percent change in purchasing power, with an average change in cost of living at 0.26 percent and an average change in per capita income at 2.53 percent. An overall inflation index of 68.96 makes Philadelphia the most inflation resistant city in Pennsylvania, compared to Pittsburgh's inflation index of 40.35, good for third in the state and 149th nationally. 

Inflation has become a much more subtle financial pressure in the United States in the years since the high inflation periods in the 1970's and early 1980's. The Federal Reserve now moderates inflation at around 2 percent per year, a luxury many other countries haven't had without holding the status of the world's reserve currency.

Philadelphia's rank compares favorably to New York City (139), Boston (218), Chicago (108), Seattle (227), and Miami (174). Among other major American cities, only Los Angeles (20) and Detroit (25) also fell within the top 25.

Here are the top 10 cities least affected by inflation in 2017:

1. Burlington, Iowa

2. Kalamazoo, Michigan

3. Dubuque, Iowa

4. Ashland, Ohio

5. Fayetteville, Arkansas

6. Columbus, Ohio

7. Bakersfield, California

8. Larami, Wyoming

9. Newark-Elizabeth, New Jersey

10. Lafayette, Louisiana

Check out the full study here.