San Diego has once again taken the lead in a ranking no city wants — the highest inflation rate in the nation. The U.S. Bureau of Labor Statistics reported Tuesday that the metro area, which includes all of San Diego County, saw prices rise 4% in July compared to last year. That marks an increase from 3.8% in both March and May, when it also held the top spot.

Story Highlights

• San Diego inflation (July): 4%, highest in U.S.

• National rate: 2.7%

• Nearby metro rates: Riverside 3.5%, Los Angeles 3.2%, Dallas 0.9%

• Top annual increases in San Diego:

  • Tuition & childcare: +9.4%

  • Meats, poultry, fish, eggs: +7.3%

  • Medical care: +6.8%

  • Shelter: +5%

• Gasoline prices: Down 3.5–4% depending on grade

• Core inflation: 4.2%

The rise stands well above the national inflation rate of 2.7%, which remained steady in July. Neighboring Riverside posted the second-highest rate at 3.5%, while Dallas came in at the bottom with only a 0.9% increase.

For years, San Diego has battled higher-than-average inflation due to its expensive housing market and elevated gasoline prices. But this year’s data shows something different — cost increases are spread across multiple sectors, making it harder to pinpoint a single culprit.

Economists are watching closely.
“It’s not clear how much of this is linked to tariffs,” said San Diego economist Ray Major. “It could take up to a year before we see the full impact of those on the economy.”

Instead, Major pointed to labor costs. He believes California’s $20-an-hour minimum wage for fast food workers has a ripple effect.
“Why would someone work for $15 an hour in child care?” he asked, noting that higher-paying opportunities in one sector may pull workers from others.

Labor supply may also be affected by federal immigration enforcement. “The crackdown on undocumented workers could be disrupting the labor market,” Major said. This impact is harder to measure because many of these workers are paid off the books.

The San Diego Regional Chamber of Commerce estimates up to 60,000 Tijuana residents legally cross into San Diego County every day for work. According to Alan Gin, economist at the University of San Diego, any reduction in that flow would have consequences.
“That would disrupt the labor market and raise costs,” Gin said. “Because we’re a border city, we likely have a disproportionate share of legal and illegal migrant workers.”

From May to July, San Diegans likely felt the pinch most at grocery stores, medical offices, and car dealerships. Medical care prices rose 3.1% in just two months, used car and truck prices climbed 1.9%, and food costs increased 1.1%.

Year-over-year, shelter costs were up 5%, transportation costs rose 5.1%, and medical care climbed 6.8%. Food prices rose across the board — cereals and bakery products (+3.2%), dairy (+3.2%), fruits and vegetables (+3.1%), and meats, poultry, fish, and eggs (+7.3%).

One area with a clear tariff link was nonalcoholic beverages, which increased 8.2% over the year, likely tied to aluminum tariffs.

Core inflation — which excludes volatile food and energy prices — reached 4.2%, slightly down from 4.3% in May.

Across the nation, the Northeast recorded the highest regional inflation at 3.2%, followed by the West at 3%, the Midwest at 2.6%, and the South at 2.3%.

San Diego’s position at the top of the nation’s inflation rankings underscores the unique economic pressures facing the region — from wage shifts and housing costs to cross-border labor dynamics. While the exact role of tariffs remains uncertain, the broad rise in prices across essential goods and services paints a clear picture: residents are feeling the squeeze in nearly every aspect of daily life. Whether driven by local labor market changes or national economic trends, the city’s elevated inflation signals ongoing challenges for households and policymakers alike.

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