The Federal Reserve Bank of Chicago has reported that inflation in the Chicago area has recently surpassed the national rate, primarily due to faster increases in housing and transportation costs. Despite this short-term trend, long-term inflation remains consistent with U.S. trends.
According to the Federal Reserve Bank of Chicago, recent annual data indicates that Chicago's inflation is now above the national average, reversing a previous pattern where it was typically at or below the U.S. rate from 2019 to 2023. The shift began around mid-2024 and has continued into 2025. The analysis also positions Chicago among the highest percentile ranks compared to other metropolitan areas during late 2024 and early 2025.
For the 12 months ending May 2025, the Consumer Price Index (CPI) inflation in Chicago was measured at 3.3%, compared to a national rate of 2.4%, creating a gap of 0.9 percentage points, according to the Federal Reserve Bank of Chicago. This divergence is supported by data from the Bureau of Labor Statistics' metro-area CPI dashboard, which confirms that Chicago's inflation exceeded the U.S. average during this period.
The report from the Federal Reserve Bank of Chicago highlights that housing contributed approximately 2.4 percentage points to Chicago's May 2025 inflation and about 0.6 percentage points of the overall gap with the national figure. Within housing, shelter costs such as rents and owners’ equivalent rent were identified as primary factors rather than furnishings or household operations. The analysis suggests that category-specific price changes in housing and earlier motor-vehicle-related expenses are responsible for this disparity, rather than differences in expenditure weights.
The proposed $16.6 billion FY2026 budget from Mayor Brandon Johnson earmarks roughly $65 million in increased revenue from an expanded rideshare congestion surcharge that will shift from a flat fee to a 10.25% tax rate for drop-offs in the newly-drawn zone. The budget documentation indicates the surcharge will apply to rides by platforms such as Uber and Lyft beyond central areas, in part to reflect the city’s acknowledgement that transportation costs are rising faster than the national average. The administration positions the rideshare fee as both a revenue tool and a demand-management lever intended to ease congestion, though critics warn it may hike travel costs for commuters in underserved neighborhoods.
The Federal Reserve Bank of Chicago is one of twelve regional Reserve Banks within the U.S. central bank system, serving most of Illinois, Indiana, Michigan, Wisconsin, and all of Iowa as part of the Seventh Federal Reserve District. It plays a role in shaping national monetary policy, supervising financial institutions, operating payment services, and conducting economic research through publications like the Chicago Fed Letter.