What Is the Cost of Living in Arkansas?

The cost of living represents the money required to maintain a certain standard of living, encompassing essential expenses such as housing, food, transportation, taxes, and healthcare. This metric is crucial for individuals and families evaluating relocation or managing household budgets. Understanding these costs provides a financial benchmark, indicating how income translates into purchasing power. Arkansas consistently demonstrates a lower cost of living compared to the national average, making it an appealing state for those seeking more affordable daily expenses.

Key Components of Arkansas Living Expenses

Housing expenses form a significant portion of living costs, and in Arkansas, these are notably lower than the national average. The median rent across the state stands at approximately $1,100, with one-bedroom apartments averaging around $669 and two-bedroom units about $831 monthly. For those considering homeownership, the median home price in Arkansas is approximately $249,000, considerably less than the national median. Property taxes also contribute to housing affordability, with Arkansas having an effective property tax rate of around 0.64%, among the lowest nationally.

Utility costs in Arkansas generally align with or fall below national figures. The average monthly electricity bill is around $137, while natural gas costs approximately $13 per thousand cubic feet. Total average monthly utility expenses, including electricity, natural gas, water, internet, and trash collection, can range from $505 to $575.

Average water bills typically fall between $40 and $60, and sewer charges can range from $60 to $90 monthly, often combined. Internet services generally cost between $55 and $95, with cellphone plans averaging $115 to $125 monthly.

Transportation is a substantial expense. The average price per gallon of regular gasoline typically hovers around $2.95 to $3.06, lower than the national average. Annual car insurance premiums vary, with minimum coverage averaging about $496 and full coverage ranging from approximately $1,652 to $2,825 annually. While vehicle ownership is prevalent, public transportation options are more limited, primarily available in major urban centers such as Little Rock, which offers bus and streetcar services.

Food expenses in Arkansas are also generally below the national average. Residents typically spend about $261 weekly on groceries. Dining out adds an average of $92 to weekly food costs. Overall, grocery prices in Arkansas are estimated to be about 4% to 20% lower than the national average.

Healthcare costs in Arkansas present a mixed picture. On average, employees contributing to employer-sponsored health insurance plans pay around $1,591 annually. While general healthcare services like doctor visits and prescription medications tend to be more affordable, the overall healthcare index in Arkansas can be slightly higher, around 1% above the national average.

Miscellaneous goods and services include personal care, clothing, entertainment, and childcare. Clothing costs in Arkansas are estimated to be about 13% higher than the national average, and entertainment expenses can also be around 13% higher. Childcare costs are a notable consideration for families; infant care averages approximately $8,869 annually, or about $739 per month. Care for a four-year-old is slightly less, averaging $8,219 annually, or about $685 per month.

Regional Variations in Arkansas

The cost of living in Arkansas exhibits notable variations across different geographic areas, with urban centers typically presenting higher expenses than rural regions. While the state’s overall cost of living is approximately 9% to 14% lower than the national average, this statewide figure masks significant local differences. Understanding these regional distinctions is helpful for individuals considering where to reside within the state.

Major metropolitan areas in Arkansas, such as Little Rock, Fayetteville, Springdale, Fort Smith, and Bentonville, generally have higher living costs. Housing, in particular, is more expensive in these urban hubs.

Little Rock’s cost of living is about 3% lower than the state average and 7% lower than the national average. Average monthly rent is around $1,083, and median home prices are about $407,536. Utilities are also lower than state and national averages, though car insurance can be higher.

Fayetteville, known for its university, experiences higher housing costs, with average home values around $327,536 and one-bedroom apartments renting for about $987. Bentonville, a growing economic center, has average one-bedroom rents around $1,339, and infant childcare can cost approximately $2,269 per month.

Car insurance in Bentonville is about 9% less than the state average. Fort Smith and Springdale also reflect metropolitan pricing, with median home values of $159,371 and $282,850.

Mid-sized cities and towns often fall between metropolitan and rural areas, offering a balance of amenities and lower costs. Jonesboro, for example, is considered the cheapest major city in Arkansas, with a cost of living approximately 13% lower than the state average and 17% lower than the national average. Its average home value stands around $206,627.

Rural areas across Arkansas generally offer the lowest living expenses, particularly for housing and property taxes. While these regions provide significant cost savings, residents may encounter different considerations regarding transportation or access to certain services. Public transportation options are often limited or nonexistent in more rural counties, necessitating greater reliance on personal vehicles. Childcare options in these areas might also be less abundant compared to urban centers.

How Cost of Living is Measured

The cost of living is commonly quantified using a Cost of Living Index (COLI), a theoretical price index comparing the relative cost of maintaining a consistent standard of living across different regions or over time. A COLI typically uses a baseline value, often 100, to represent the national average for goods and services. Locations with an index figure above 100 are considered more expensive than the national average, while those below 100 are less expensive. This standardized approach allows for a direct comparison of purchasing power.

COLI calculations rely on data from a standardized “basket of goods and services.” This basket includes common consumer expenditures across six categories: housing, utilities, groceries, transportation, healthcare, and miscellaneous goods and services. Organizations like the Council for Community and Economic Research (C2ER) survey prices for specific items within each category in urban areas. This data is then weighted based on typical household expenditure patterns to create a comprehensive index.

Several reputable entities contribute to the measurement and reporting of cost of living data. The Council for Community and Economic Research (C2ER) is a prominent source, known for its quarterly Cost of Living Index providing consistent place-to-place comparisons. Other organizations, including the Economic Policy Institute and government agencies like the U.S. Census Bureau and the U.S. Bureau of Labor Statistics, compile and utilize cost of living data for economic analyses and reports.

While the COLI provides valuable insights, it is important to acknowledge its aspects as a statistical measurement. The index represents averages, meaning individual spending habits and consumption patterns will vary. The selection of items for the “basket of goods” involves subjectivity, and different methodologies may yield slightly different results. Additionally, a COLI primarily measures price differences at a specific point in time and does not directly measure inflation, which is the change in prices over time. The index also provides a single value for an entire city or region, though living costs can fluctuate significantly within the same area.