The Conversation - The rural-urban inflation gap

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I’m an urbanite. And as such I do very urban-y things: I take regular and accessible public transport and eat out too often at one of the many restaurants within a stone’s throw of my small, but easily heatable, apartment. But somewhere out there, there is another “Matt Williams” (it is, after all, a very common name). And that Matt Williams is rural. With no buses or trains stopping near his old, drafty house, he has to rely on a car. He uses the rapidly depreciating vehicle to travel long distances for services and goods, such as groceries to cook at home.

There is a point to these hypothetical musings: People in the country have different consumption habits from those living in cities. And yet, the headline rate of inflation – the one that gets talked about every month and guides interest rate decisions – only reflects what urban consumers buy, with rural Americans’ purchases taking no part in the survey. To economists Stephan Weiler from Colorado State University and Tessa Conroy from University of Wisconsin-Madison, that is not only frustrating, but it could be masking a rural-urban inflation gap. Reviewing where the price hikes are, they write that consumption habits suggest “rural Americans suffer more as the cost of living goes up.”

“Indeed, rural inflation may be more pernicious than urban inflation, with price increases likely lingering longer than in cities,” they add.

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Matt Williams

Senior Breaking News and International Editor

Calculating the cost of living in the country. Ariel Skelley/Getty Images

Rural Americans aren’t included in inflation figures – and for them, the cost of living may be rising faster

Stephan Weiler, Colorado State University; Tessa Conroy, University of Wisconsin-Madison

The rising cost of living doesn’t hit all Americans equally. Yet the benchmark figure for charting the rising cost of living excludes people in rural areas.

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