Relatively stable prices for a variety of consumer goods and services kept inflation muted on Oahu during the first half of the year, according to a government report Thursday.
Inflation as measured by the Consumer Price Index rose 1.8 percent during the first six months of 2013 compared with the same period a year earlier, the U.S. Department of Labor reported. That was down from a 2 percent increase in the index during the second half of 2012 from a year earlier.
"It was lower than we expected. We started out the year projecting inflation to be well over 2 percent for 2013," said Eugene Tian, the state’s chief economist. "But we’re going to have to revise that down."
Among the major components of the index, the biggest increase was in the cost of food and beverages, which rose 3.9 percent. Medical care increased 2.8 percent, and the cost of shelter went up 2.2 percent.
The biggest decline was in the cost of apparel, which fell 2.3 percent from the same period a year earlier. A drop in oil prices helped bring down overall energy costs by 0.2 percent, including a 0.7 percent drop in gasoline prices.
Hawaii’s electricity prices, which are also tied to the cost of oil, rose a scant 0.4 percent. Despite the modest rise in electricity prices, Hawaii households and businesses are still saddled with the nation’s highest electricity rates by far. Residents paid an average of 36.9 cents a kilowatt-hour for electricity in April compared with the national average of 11.9 cents a kilowatt-hour, according to the latest data available from the U.S. Energy Information Administration.
Tian said faster economic growth such as Hawaii is now experiencing normally is associated with higher inflation. However, this time both the nation and the state are a "special case" because inflation rates are lower than expected, he said. The explanation appears to be lower oil prices, which are exerting downward pressure on CPI, he said.
Honolulu has been seeing tame consumer prices going back to the last recession, said David Kong, a statistician with the Labor Department’s regional office in San Francisco.
"If you look at it historically, you don’t see any acceleration. Things seem to be staying pretty steady," he said.
Honolulu’s inflation rate averaged between 4 percent and 6 percent annually during the four years that preceded the 2008-2009 recession.
