Expensive Here, Cheap There

But why are there such huge disparities across the country when it comes to everyday items? Sure, with its overpopulation and disproportionately high incomes, it makes sense that New York has the highest per-month mortgage rate, on average, or that Seattle--with its government-run energy supply--boasts the lowest monthly energy costs.

But what is it about San Antonio that keeps its food prices so low? Or New York's energy costs so high?

Erol Yildirim, director of data products at C2ER, says that in the simplest terms, it has to do with supply and demand. In San Antonio, for example, the median household income was $36,214, according to the U.S. Census Bureau. In Manhattan, the median income per household is $47,030. "People who make less money demand less, which means suppliers can't afford to charge more," says Yildirim.

Prices Rising Everywhere

For example, the total rise in food costs over 2008 is expected to be 5% to 6% nationwide, according to the U.S. Department of Agriculture. That's the biggest increase since 1990, which means we're all, on average, paying more to eat than we were in 2007.

And on a microeconomic level, prices have a lot to do not only with personal income in specific areas, but with the health of the city's very specific economic woes or triumphs. For example, part of the reason why many cities in California report high food prices has to do with the fact that energy and fuel costs in the region are high.

In Boston, a pair of denim jeans for boys cost $40, on average, in the third quarter of 2008. Why were they nearly three times more expensive there than in Indianapolis? There were fewer markdowns at the first city's retailers, meaning the demand was higher and the economy was stronger. And while the median household income in Boston is $52,792, it's just $40,051 in Indianapolis.

Unfortunately, as the economy worsens, this disparity between cheap and expensive isn't going to go away.