Honolulu's inflation only 0.3% so far this year, but food up 5.8%
BY Greg Wiles
Advertiser Staff Writer
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One upside of a slowing economy is low inflation.
Honolulu's inflation rate had its smallest gain in 11 years during the first half of 2009 as gasoline plummeted from last year's record highs and housing price gains slowed.
The midyear report released by the U.S. Bureau of Labor Statistics shows a scant 0.3 percent increase in the Consumer Price Index from July 2008 to June 2009. That compares with calendar year 2008, when inflation was 4.3 percent.
"The overall number is fairly weak and that's what we'd expect," said Leroy Laney, a Hawai'i Pacific University economics professor. "Nobody was expecting inflation to take off."
The lower price increases are reflective of a slowing economy and a comparison with a period last year in which energy prices were rising toward record highs. Hawai'i's inflation rate also has been on the decline since 2006, when inflation soared to a 15-year high of 5.9 percent.
The index is a way of monitoring cost-of-living changes, and involves tracking changes in a market basket of goods and services ranging from breakfast cereal to airline fares and housing costs.
The Bureau of Labor Statistics said Honolulu experienced an 11 percent decline in transportation costs, with gasoline tumbling by one-third compared with a year earlier.
It also reported:
Honolulu's inflation rate has been higher than the U.S. average for the past five years. That continued in the first half of 2009 with the 0.3 percent increase comparing to a 0.6 percent decline in the All-Urban Consumers rate.
Todd Johnson, a Bureau of Labor Statistics spokesman, said Hawai'i's rate has been higher than the national average of late due to its housing prices and reliance on petroleum for most of its energy needs.
"Honolulu is certainly more of a unique market than a lot of cities," Johnson said.
Laney noted inflation may continue at lower levels given unemployment rising this year. He said inflation usually falls when unemployment — a measure of economic well-being — increases, and rises when unemployment declines.
Hawai'i's unemployment rate has been below the national average in recent years. The Bureau of Labor Statistics' comparison of the first six months of 2009 to the last six months of 2008 shows prices fell 1 percent.
"We're not seeing much of a recovery here," Laney said.
The Bureau of Labor Statistics releases inflation figures for 13 cities on a semi-annual basis. Only three of the 13 cities reported yesterday had a rise in their Consumer Price Index. Besides Honolulu's 0.3 percent, Anchorage, Alaska's inflation rose 1.3 percent and Pittsburgh was up 0.5 percent.
The other 10 cities reported declines, with Cincinnati experiencing a 2 percent decrease. Larger cities' inflation rates are reported on a monthly or bimonthly basis.
