MADISON AUMENT
For 91.9 KVCR News, I'm Madison Aument, and this is Economics IE. Daniel McDonald is a professor of economics at Cal State San Bernardino. He also writes a free Substack newsletter called Inland Empire Economic Intelligence.
Every two months, inflation data is published for the Inland Empire. So this week, McDonald joined me to talk about the ways people in the IE are still feeling the sting of inflation.
First, I'm just curious. Overall, what does inflation look like in the Inland Empire for May 2025?
DANIEL MCDONALD
So in May 2025, the all-items inflation rate was 2.6%. That basically means that if you compare prices in the Inland Empire in May 2024 to prices in the Inland Empire in May 2025, they increased, on average, by 2.6%. "All items" means it includes all expenditure categories that a typical consumer in the Inland Empire would be spending their budget on. That includes things like apparel, education, food and beverages, housing—all of those different expenditure categories, on average, increased in price by 2.6% in May 2025.
That was slightly higher than we had in the previous reading from March of 2025. That was a little disconcerting, but it is a trend that follows national trends as well. So the national inflation rate also increased in May.
AUMENT
Um, it’s comparable, or it matches, sort of, the national trend. Um, how do we interpret that? Is that—?
MCDONALD
Well, you might have expected the Inland Empire to be an exception because of how sensitive our economy is to trade logistics and manufacturing. We've seen a lot of discussion about the impacts of tariffs on the economy recently. So, you know, each region has its own particularities that might make inflation go a little above the national average or a little below it.
So I do think it's somewhat noteworthy that we're kind of following the national trends. Because nationally, what many analysts have talked about is that—well, where is this tariff-based inflation? And we haven't seen it yet. So it seems to suggest, then, that that's the same in the Inland Empire. We also haven't seen that tariff-induced inflation that many people have called for.
I actually looked specifically at different expenditure categories. I mentioned, you know, there's apparel, education, transportation. You can also compare the inflation of goods to the inflation in services. So you might expect, for example, that inflation in goods would be more susceptible or prone to the tariffs, and so we might be seeing higher inflation in goods than in services.
But that's actually not true. It's actually the reverse. Services inflation has remained high. So that would be education, medical care—even restaurants are technically a service, even though you might think of them as a good. Like, you buy, you know, some chicken wings at a restaurant, but that's technically a service because someone is actually cooking them for you, as opposed to, for example, groceries.
So all of those kinds of services have seen much more inflation relative to both durable and non-durable goods. I even looked specifically at those two subcategories of goods, and both show relatively low inflation.
AUMENT
I sometimes think people feel like they're being gaslit about inflation and things being more expensive. And the one thing I hear a lot is, "Restaurants are so expensive." Like, it's so expensive to go eat out. So I hope people feel validated, at least, by this information?
MCDONALD
Yeah, I agree. I believe the gaslighting is very big, in particular with inflation, because economists will try to tell regular people, "Oh no, you know, inflation is cooling down or it's slowing."
That still means prices are rising, right? If inflation is positive—regardless of whether it's 1% or 5%—that still means prices are increasing. They're still affecting people. But it is important to think about, well, which prices are increasing and which are not, right? Being sensitive to that.
Another thing that I found, for example, is that housing prices—housing inflation—has cooled down somewhat. It's still positive, but it's returned to some of the more normal levels.
AUMENT
That was Daniel McDonald. His free Substack is called Inland Empire Economic Intelligence. You can find this segment and others on our website at kvcrnews.org. Support for this segment comes from the Nowak Family. For KVCR News, I'm Madison Aument.
