Traveling to various states in the United States will have anyone notice the difference in how much the dollar is really worth. The prices for goods is not fixed and variable. The prices change depending where a person is in the US.
The difference in prices
One gallon of gas will cost $1.82 in South Carolina, while it will cost $2.74 in Hawaii.
An average Tennessee resident will pay half the price of the electric bill of an average Connecticut resident.
Tuition fees on public colleges will also vary by state.
Regional Price Parities
The government has been keeping tracks of price disparities for years now. They have created what they call Regional Price Parities which measures the fluctuations of prices across the states.
The Bureau of Economic Analysis recently published their data last July. This data shows that the dollar can swing 30 percent more of what it can buy.
Example of price disparities
For a better understanding, imagine a store which offers a wide array of goods and services. Each of the items are priced according to its national-average price. Now, imagine a cart is filled with items that totals $100 from that store.
In Hawaii, 85 percent of the items in a cart is what the $100 is worth. While in Mississippi, one can get $115.30 worth of items for the $100.
Real value of the dollar
The dollar’s “real value” is highest in Mississippi and Arkansas which is worth $114.30, while it is worth the least in the District of Columbia at $84.70, Hawaii and New York at $86.40, New Jersey at $87.30, California at $89, and Maryland at $90.70.
The data used to calculate the Regional Price Parities is from the Consumer Price Index (CPI).
For the Consumer Price Index, the government is keeping tracks of a lot of goods and services such as college textbooks, electricity, cars, and even cereals. It also keeps track of rents which is variable in various states.
The “real value” of the dollar is also different in rents. The $100 is worth roughly $63 in Hawaii and is worth $160 in Arkansas.
So when an Alabama resident visits New York and looks into his New York City Illustrated Map to check where to avail of services in the city, he is now well aware of the lesser value of his money.