San Diego County started 2026 with its lowest inflation rate in more than a year.

The region’s rate dropped to 2.6% in January, said the U.S. Bureau of Labor Statistics’  Consumer Price Index on Friday. That’s a marked departure from the end of  last year when the rate hit 4% at the end of last year. It is now at the lowest level since November 2024.

San Diego was not alone: The U.S. inflation rate fell to 2.4%, its lowest since March 2021. Most metro areas also saw big drops, driven largely by declining gasoline prices.

Gasoline was also the main factor affecting San Diego County’s inflation rate, down 1.5% from the same time last year and 8.4% lower since November. Other big price drops year-over-year were in used cars and trucks, down 2.5%; and meats, poultry, fish, and eggs, down 1.6%.

In a change from last year, the San Diego metropolitan area’s rate fell to the sixth highest in the nation for the 12 metro areas with data released Friday. America’s Finest City alternated between having the first or second highest inflation rate in the nation for the last six months of 2025.

Regions with the highest inflation in January were the Riverside-San Bernardino metro area, at 3.2%, and Los Angeles and Orange counties at 3%. The Dallas-Fort Worth metro area saw its inflation drop to 0.3% and was the only region with a negative rate.

“(The San Diego rate) is a little bit of an improvement,” said Alan Gin, an economist at the University of San Diego, “but it’s still higher than the national level.”

He said San Diegans, hit with some of the highest inflation in the nation since the pandemic, still struggle with rising prices. The biggest factor in the region, Gin said, continued to be housing costs, which were up 3.7% here compared to 3.4% in the nation.

The bureau’s housing calculation includes rent, household items, lodging away from home and homeowner expenses, like insurance costs. Average homeowner insurance costs have risen nearly 70% over the last five years, according to ICE Mortgage Technology. Two of California’s largest home insurers, CSAA and Mercury Insurance, will raise rates this year an average 6.9%, The San Francisco Chronicle reported.

Gin said several categories in San Diego County, which reflect nationwide gains, were likely impacted by tariffs. For instance, household furnishings were up 6.4% annually, which raises the question, did the price of a chair or couch suddenly shoot up or is something else going on? IKEA, with a store in Mission Valley, said in October it would be increasing prices as it adapts to tariffs.

Eesha Sharma, a marketing professor at San Diego State University, said consumers’ perception of decreased wealth, in part driven by inflation, can affect their spending patterns throughout the region. San Diegans who feel more financially constrained, she said, may be inclined to stockpile goods because they expect prices to go up more, in addition to cutting down on purchases.

In research Sharma co-authored for the Federal Reserve of Philadelphia, she found consumers with higher median incomes (like in San Diego County) can sometimes change spending habits because they feel poorer, even if it might not correlate with their bank accounts.

On an annual basis, here are the areas where prices changed in San Diego County:

Motor fuel: The price for unleaded regular was down 1.5%; unleaded midgrade was also down 1.5%; and unleaded premium was down 1.2%.
Food: Cereals and bakery products were up 4.8%; dairy, up 1.3%; fruits and vegetables, down 1%; and meats, poultry, fish and eggs were down 1.6%.
Energy, including household energy and motor fuel: Up 6.7%.
Shelter, including rent and owners’ equivalent of rent, was up 2.5%.
Transportation costs, which include automobile maintenance, vehicle parts and car insurance, were up 1.9%. Used car and truck prices were down 2.5%.
Apparel: It was down 1.5%.
Medical care: It was up 6%.

When volatile food and energy costs are removed from the overall inflation rate, so-called core inflation in San Diego County is 2.5%, the same as the nationwide average.

Nationally, inflation was highest in the Northeast at 2.8%. It was followed by the West at 2.7%, Midwest at 2.4%, and the South at 1.9%.

Inflation rate by metro area

Riverside-San Bernardino-Ontario, CA: 3.2%Los Angeles-Long Beach-Anaheim, CA: 3%New York-Newark-Jersey City, NY-NJ-PA: 2.9%Washington-Arlington-Alexandria, DC-VA-MD-WV: 2.7%Denver-Aurora-Lakewood, CO: 2.6%San Diego-Carlsbad, CA: 2.6%Urban Hawaii: 2.4%Tampa-St. Petersburg-Clearwater, FL: 2.3%Minneapolis-St.Paul-Bloomington, MN-WI: 1.8%Boston-Cambridge-Newton, MA-NH: 1.4%Chicago-Naperville-Elgin, IL-IN-WI: 1.3%Dallas-Fort Worth-Arlington, TX: -0.3%

Source: U.S. Bureau of Labor Statistics’ Consumer Price Index