Honolulu inflation heated up during the first half of this year as rising medical and food costs offset declining electrical bills and cheaper prices at the gas pump.
The consumer price index — the most widely used measure of inflation — jumped 2.4 percent from the same period a year ago and rose 0.6 percent from the second half of 2015, according to data released Friday by the U.S. Bureau of Labor Statistics.
It was the largest annual increase since 2012, when inflation rose 2.8 percent during the first half of that year from the same period in 2011. The 0.6 percent semiannual increase was the most since 2013, when the index rose 1.2 percent during the first half of that year from the second half of 2012.
The state Department of Business, Economic Development and Tourism forecast in May that inflation for all of 2016 would rise 2 percent after increasing 1 percent in 2015 over 2014.
“The 2.4 percent is a little more than we expected,” DBEDT chief economist Eugene Tian said. “This CPI growth is higher than the average growth in the past 20 years, which was 2.2 percent. Higher consumer inflation means a decrease in purchasing power, and real (inflation-adjusted) income would decrease.”
Honolulu’s inflation easily outpaced the nation’s, which was up 1.1 percent during the first six months on a year-over-year basis. The U.S. change from the last six months of 2015 was only 0.4 percent.
“The overall rate in Hawaii of 2.4 percent is a pretty modest increase, although it was a faster increase than we saw in the rest of the country,” said Amar Mann, a San Francisco-based regional economist for the U.S. Bureau of Labor Statistics. “One of the primary reasons the rate wasn’t higher was due to declining energy prices. At this time last year they were about 20 percent higher.”
Gasoline prices in Honolulu plunged 21.6 percent during the first half of 2016 compared with the year-ago period, while electricity costs dropped 13.6 percent.
However, medical care costs jumped 9.4 percent while shelter expenses, whose weighting represents nearly one-third of the index, rose 3.6 percent. Recreation rose 3.4 percent.
It also became more
expensive to dine out as
eating away from home rose 5.4 percent while the cost rose only 1.7 percent for those who bought groceries and ate at home. Overall, food and beverage costs rose 3.3 percent from the year-earlier period.
“Eating out is definitely getting more expensive in Hawaii,” Mann said. “Of course, housing has never been a great bargain in Hawaii. We’ve seen the trend continue over the last year and see higher rental prices in particular for Hawaii.”
All items, less the volatile food and energy categories, increased 3.6 percent in
Honolulu during the first half of 2016 from the year-earlier period. That same category for the U.S. was up 2.3 percent over that same period.