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The Bureau of Labor Statistics (BLS) reported that consumer prices rose 2.9% in July. This is a national rate, and it is important to note that inflation can differ from one area to another.

Below we track the change in the consumer price index for metro areas with more than and less than 2.5 million residents. This shows how smaller cities suffered from deflation in 2015, a time when both oil & gas and manufacturing—industries that are prominent in smaller cities—were weak. Larger cities, which are largely driven by services and information-based activities, were less affected.

During the COVID-era, inflation also had a big-city/small-city divide. Prices initially ran up faster in smaller cities, likely reflecting a spurt of in-migration. Many smaller cities also lifted public-health restrictions more quickly than did large urban centers, allowing the revival of commerce to push up prices more quickly. Today, consumer prices are falling slightly faster in smaller cities, likely because housing costs—the largest component of CPI—have been more resilient in big cities.