Two economists studying rural America say official inflation numbers don’t count people living outside the cities – and their own analysis shows they could suffer more

The inflation rate is still high at 6.5% currently, although it has fallen slightly since the end of 2022.

The headline inflation rate, along with core inflation – which excludes volatile food and energy costs – is seen as the key to determining whether the economy is heating up too quickly, and guided the Fed as it pushed through several large 0.75 percentage point rate hikes in 2022 .

But the main indicator of inflation, the consumer price index, is compiled by looking at the price changes that specifically urban Americans pay for a given shopping cart. Those living in rural America are not surveyed.

As economists studying rural America, we believe this poses a problem: people living outside America’s cities make up 14% of the US population, or about 46 million people. They are likely to face different financial pressures and consumption habits than city dwellers.

The fact that the Bureau of Labor Statistics only surveys urban residents for the consumer price index makes estimating rural inflation much more difficult — it may even mask a rural-urban inflation gap.

Assessing whether such a gap exists requires turning to other price data and qualitative analysis to get a picture of price growth in non-urban areas. We did this by focusing on four critical goods and services where rural and urban price effects can differ significantly. We found that rural areas actually suffer more from inflation than urban areas, resulting in an underestimated gap.

1. The cost of operating a car in the country

Higher costs related to cars and gasoline may contribute to an urban-rural inflation gap that severely impacts the disposable incomes of families outside urban areas, according to a 2022 report.

This is likely related to the fact that there are significant disparities in vehicle purchases, ownership, and commute times between urban and rural Americans.

Owning a car is an integral part of rural life and essential for getting from place to place, while city dwellers can more easily choose cheaper options such as public transport, walking or cycling. This has several implications for rural spending.

Rural dwellers are forced to spend more on car purchases. They are also more likely to own a used car. In the first year of the COVID-19 pandemic, used car prices rose sharply due to a shortage of new vehicles due to supply chain constraints. Remote areas are likely to have been disproportionately affected by these price increases.

Rural Americans tend to drive further as part of their daily activities. Increased isolation often requires rural workers to travel longer distances to work and to look after children, with the proportion of those driving 80 kilometers or more to work increasing in recent years. In upper Midwest states, nearly 25% of workers in the most remote rural counties commute 50 miles or more in 2018, compared to just over 10% of workers in urban counties.

Longer journeys mean cars and trucks wear out faster. As a result, rural dwellers will have to spend more money repairing and replacing cars and trucks – hence any rise in car inflation will hit them harder.

Although fuel costs can be volatile, periods of high energy prices – like the one the US experienced for much of 2022 – will likely hit rural dwellers disproportionately given the need and greater distances of driving. Anecdotal evidence also suggests that gas prices can be higher in rural communities than in urban areas.

2. Rising costs of eating out at home – and traveling for groceries

As eating out becomes more expensive, many households may choose to eat out more often to cut costs. But rural dwellers are already spending a larger amount on eating out at home – probably in part due to fewer choices for eating out.

This means they are less flexible as food costs increase, especially when it comes to essential foods to prepare at home. And as annual food price inflation exceeds the cost of dining out — 11.8% versus 8.3% — dining at home becomes comparatively more expensive.

Rural Americans also drive more to get groceries — the average rural household travels 5 kilometers (3.11 miles) to get to the nearest grocery store, compared to 1.1 kilometers (0.69 miles) for city dwellers. This translates into higher costs to feed a rural family and in turn, higher vehicle depreciation.

Rural grocery stores are also declining, being replaced by dollar stores. As a result, fresh food in particular can become scarce and expensive, leading to more restricted and unhealthy diets. And with home food prices rising faster than restaurant prices, the tendency of rural dwellers to eat more at home will cause their costs to rise faster.

3. The costs of aging and getting sick outside of the cities

Demographically, rural counties tend to age—part of the effect of younger residents migrating to cities and college towns, either for work or education. And older people spend more on health insurance and medical services. The cost of overall medical services has also increased, so these older populations will spend more on essential doctor visits.

Also in terms of health, any increase in gasoline prices will disproportionately hit rural communities harder, as additional travel will be required to obtain even basic care. On average, rural Americans travel 5 miles (8 kilometers) more to get to the nearest hospital than those who live in cities. And specialists can be hundreds of kilometers away.

4. Cheaper household bills, but heating and cooling can be expensive

Rural Americans aren’t always the losers when it comes to the inflation gap. One point in rural areas that favors them is housing.

Outside of cities, housing costs are generally lower due to lower demand. More rural Americans own their homes than city dwellers. Because owning a home is generally cheaper than renting during a period of rising housing costs, this is helping protect homeowners from inflation, especially as house prices soared in 2021.

But even renters in rural America spend relatively less. Since housing makes up around a third of the consumer price index, these cost advantages benefit the rural population.

However, lower quality housing leaves rural homeowners and renters vulnerable to rising heating and cooling bills and additional maintenance costs.

Inflation – a disproportionate burden

While there is no conclusive official quantitative data showing an urban-rural inflation gap, a review of rural life and consumption habits suggests that rural Americans suffer more as the cost of living rises.

In fact, rural inflation can be more damaging than urban inflation because price increases are likely to last longer than in cities.

Stephen Weiler is an economics professor at Colorado State University.

Tessa Conroy is an economic development specialist at the University of Wisconsin-Madison.

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