If it feels like your wallet is shrinking faster than usual, you’re not imagining things — San Diego just clocked the highest inflation rate in the nation for the second time this year.
According to the latest data from the U.S. Bureau of Labor Statistics, prices in San Diego County rose 3.8% in May 2025 compared to the previous year. That’s well above the national average of 2.4% and outpaced inflation in cities like New York (3.4%) and Chicago (3.3%). Experts say it all comes down to one major culprit: housing.
What’s Driving Prices Up?
Housing Costs
Shelter costs — including rent and homeowners' equivalent rent — jumped 5.3% year-over-year in San Diego. In a city already dealing with limited housing supply, rising prices are forcing businesses to offer higher wages to attract workers. But when businesses raise wages, they often raise prices too. That ripple effect impacts everything from haircuts to hamburgers.
Dining Out & Childcare
Dining out costs surged 6.9%, while tuition, school fees, and childcare climbed an eye-watering 8.7%. Childcare alone is now costing many families more than their housing bills — an alarming shift for working parents already struggling to make ends meet.
Transportation & Medical Costs
Transportation costs, which include gas, vehicle maintenance, and insurance, rose 2.5%, while medical care went up 3.7%. Even basic services like doctor visits or car tune-ups are costing more than they did a year ago.
What’s Actually Cheaper Right Now?
Not everything is rising. Some prices in San Diego saw a dip this spring:
- Apparel: Down 7.6%
- Gas: Unleaded regular gas prices dropped 8.3% year-over-year
- Cereal and dairy products: Also saw modest declines
So yes, if you’ve been filling up your tank and skipping the new wardrobe, you’re doing inflation right.
What’s Next?
While economists originally expected inflation to slow down, new tariffs on imported goods — especially from China — may keep prices high into the holiday season. This could mean tighter budgets for everything from toys to tech.
At the same time, there's speculation that the Federal Reserve might cut interest rates in the fall to stimulate spending and investment — but only if inflation stabilizes. If tariffs kick in hard, we could see the opposite.
So What Can San Diegans Do?
Keep an Eye on Spending: Track which categories are seeing the biggest price jumps. Consider swapping dining out for home-cooked meals or seeking flexible childcare options like co-ops.
Look for Local Support: Some nonprofits and city programs are stepping up to help families navigate rising costs — from subsidized childcare to affordable housing waitlists.
Shop Smart: Take advantage of price dips in apparel and gas while they last. If you need big-ticket items, now might be the time — especially if those items are tariff-exempt or already in stock.
San Diego may be leading the nation in inflation for now, but local resilience runs deep. As policies shift and economic forces play out, we’ll be keeping an eye on what it all means — for your wallet, your lifestyle, and your community.
