Prepared by KADAC @ DeSales University
Director: Kamran Afshar, Ph.D.
Student Assistant: Brandon Reese

Lehigh Valley’s inflation rate in 2020 was 2.2%, according to the Kamran Afshar Data Analytics Center (KADAC) @ DeSales University.

During the 1980s and 1990s, the inflation rate in the Valley was often less than the national average. Between 2000 and 2007, the Valley’s inflation rate started to exceed that of the national average. Data collection was suspended between 2007 and 2017.

Data collection was restarted in 2018, with an updated basket of goods and services for the Valley. Lehigh Valley’s inflation rate was 2.2% in 2020, which is 0.9 percentage points higher than the 1.4% inflation at the national average. According to Lehigh Valley’s CPI, between December 2018 and December 2020, local prices have increased by 5.9%, compared to 3.7% at the national average.

Food prices rose by 5.5% in 2019 in the Valley, significantly higher than the national average of 1.8% for that year. In 2020, local food prices rose by 4.4%, a little higher than the national average of 3.9%. Fruits and vegetables, a sub-category of food, increased by 18.1% during 2019 and 2020; this is significantly higher than the national average of 1.8% during the same period. Another sub-category, food away from home, rose by 5.6% in 2019 and 7.0% in 2020, compared to 3.1% and 3.9%, respectively, at the national average.

In 2019 shelter costs in Lehigh Valley rose at a higher 5.3% in the Valley compared to the 3.2% at the national average. In 2020, the equation was reversed; the Valley’s shelter inflation rate was a negative 1.4% compared to a positive 1.8% at the national average. A 2.9% decrease in the sub-category of rent and rental costs in the Valley compared to a 1.9% increase at the national average was the most prominent cause of this rate divergence. Over the last two years, shelter costs in the Valley have increased by 3.9% compared to 5.1% at the national average.

Medical care costs in the Valley, rose at a faster pace than the national average, which is consistent with historical data.

Transportation costs rose by 0.8% in 2019 in the Valley compared to 1.9% at the national average. In 2020, Valley’s transportation costs rose 1.3%, compared to a drop of 2.4% at the national average. The main reason for this difference in 2020 was that motor fuel costs nationwide dropped more than those in the Valley.

One of the interesting flip-flops among the inflation rates that we observed in 2020 was the inflation rate of apparel, which historically has been negative or, at best, very low. Apparel costs in the Valley rose by 9.8% in 2020, after dropping 6.5% in 2019. Nationwide, however, apparel costs dropped in both years, resulting in a 5.1% drop compared to the Valley’s 2.7% rise for 2019 and 2020.

The rate of inflation rose by 5.8% during 2019 and 2020 in the Valley. During the same period, inflation at the national average was 3.7%.

CPI, or the consumer price index, reflects the change in the cost of an average urban basket of goods and services purchased by consumers. Higher inflation means prices are rising at a higher pace. And the price of almost all the items in the consumer basket of goods is based on their supply and demand. Since Lehigh Valley does not appear to be subject to any negative supply chain issues that push its prices up, the Valley’s higher inflation rate is most likely the result of relatively higher consumers in the Valley than the national average.