Florida TaxWatch, in a recently published economic analysis entitled ‘The Great Imbalance: Inflation’s Influence in the COVID-19 Economy,’ estimates that inflation should resolve itself by the beginning of next year, with the cost of common goods returning to pre-pandemic prices.
The Consumer Price Index (CPI), which measures the average change in prices paid by consumers for purchased goods and services, was 7 percent higher in December 2021 than it was in December 2020, marking the highest one-year increase since 1982.
“While we should begin to see improvement on the inflation front before the end of the year, returning to more characteristic pre-pandemic pricing by 2023, the impact of the COVID-19 economy will be with us for a while,” said Florida TaxWatch President and CEO Dominic M. Calabro. “Florida TaxWatch will continue to monitor these shifts and contribute to important policy discussions, as appropriate.”
The economic report also found that inflation is exhibiting regional variation throughout Florida. Tampa tops the list with the highest year-over-year price increase at 8 percent, above major cities like Orlando, Jacksonville, and Miami. It also surpasses both the southern U.S. (7.2 percent) and national (6.8 percent) averages.
Year-over-year percentage increases in the CPI are anticipated to fall by mid-year (4.8 percent) and then even lower (2.8 percent) by the end of 2022. In other words, inflation improvement should begin to materialize by mid-2022 and slowly fall closer to a more characteristic 2 percent by 2023.
“With the state getting ready to act on one of the largest budgets in Florida’s history, and recently reporting higher than expected revenues due to economic activity, it’s important for elected leaders to keep focus on the need to invest wisely, grow prudently, but also to return excess dollars back to taxpayers whenever they can so that Florida families and businesses can deal with the pressures and realities our report touches on,” said Calabro.
Florida TaxWatch states that the current inflation is the result of low supply – caused by declining production capacities and constrained supply chains – and high demand, which soared after vaccines became widely available and federal stimulus payments were received.
Florida Governor Ron DeSantis has attempted to mitigate the rising prices through a plethora of methods that run the gamut of key industries from gas to supply chain.
DeSantis called on lawmakers in November to allocate $1 billion for a gas tax relief to alleviate the financial strain on drivers at the pump.
“What we’re going to be proposing in the next legislative session is over $1 billion in gas tax relief,” said DeSantis. “There’s a whole bunch of things that go into the price of gas, different taxes, federal, state, local level. We’re taking over 25 cents from Florida and we’ll basically zero that out for as long as we can and do over a billion dollars.”
DeSantis additionally offered the use of Florida’s shipping ports to increase the rate at which cargo shipments are received.
“Our ports operate 24/7, I mean, that should be happening anyway,” the governor said. “We in Florida have the ability to help alleviate these logjams and help to ameliorate the problems with the supply chain. We’re here, we have the capacity.”