Honolulu’s inflation rate is easing, but prices for some items are still higher than they were last year, according to federal data.
The U.S. Bureau of Labor Statistics reported Tuesday that inflation — as measured by the consumer price index — in May rose 2.0% over the past year for Honolulu, continuing a downward trend.
In March, Oahu’s rolling 12-month inflation rate fell to 3.3% compared with the previous rate of 5.2% in January.
State economists consider the stabilizing inflation rate to be good news for Hawaii overall.
“It is good news because 2% is the average of the 10 years between 2009 and 2019,” said the state’s chief economist, Eugene Tian. “In normal economic conditions for both the U.S. and Hawaii, it’s about 2%. That’s why the Federal Reserve set the target at 2%, so we are actually coming to a normal inflation environment.”
Tian, who is with the state Department of Business, Economic Development and Tourism, projects inflation for the full year to settle at about 3.1%, lower than the projected U.S. consumer inflation rate of 4.0%.
The latest increase was influenced by higher prices for food and shelter, according to BLS, balanced by a decline in energy prices.
In Honolulu, energy prices in May decreased 7.3% compared with a year ago, due mostly to a decline in electricity and gasoline prices.
Prices for electricity declined 3.1%, while prices for all types of gasoline declined 10.7% in May compared with a year ago.
The average cost for a gallon of regular gasoline Tuesday in Honolulu was at $4.64, compared with $5.42 a year ago, according to AAA.
High cost of food
But putting food on the table still comes at a high cost, with food prices rising 5.1% more than a year ago, according to the data.
Broken down by category, food at home increased 1.9%, while food away from home increased 10.0% over the year.
The highest cost increases were in cereals and bakery products and in dairy and related products — which rose 6.0% and 3.7%, respectively.
Hawaii residents are still struggling to feed their families, according to Amy Marvin, president and CEO of the Hawaii Foodbank.
“We’re continuing to see our numbers tick up at our distributions,” she said, “and we’re finding people who were always able to make ends meet — they are working — and they can’t do it any more because it’s just so expensive.”
In April, the food bank served an estimated 127,000 people on Oahu, about 6% more than 120,000 in March.
Now, many of the pandemic-related programs, such as the additional Supplemental Nutrition Assistance Program benefits, have ended. Federal funds for food banks also have ended.
“It is a difficult time because we are getting squeezed on all ends,” Marvin said.
And grocery prices soared, she noted. Based on the BLS data, the cost of food at home from March 2020 to March 2023 increased about 25%.
The highest increase in the consumer price index was for apparel, which rose nearly 17% over the past year. The cost of medical care grew nearly 7%, and the cost of housing increased nearly 1%.
Usually these are based on supply and demand, according to Tian, who attributed the increasing cost of medical care to the shortage of medical professionals such as doctors, surgeons and registered nurses.
Demand for medical care, however, is expected to grow as Honolulu’s population ages.
But inflation is only part of the story, according to Tian. Even when inflation was below 2.0% in 2018 to 2020, families struggled with the cost of living due to Hawaii’s high housing costs.
Hawaii families spend about 40% of their income on housing, which is a higher proportion than the rest of the nation.
In its most recent, second-quarter statistical and economic report, DBEDT revised economic growth projections for Hawaii this year slightly higher from 1.7% to 1.8%.
The report said the Hawaii economy has not yet recovered from the recession caused by the COVID-19 pandemic, but noted some areas of improvement, including the continued decline in the inflation rate.
“I think we are still continuing to recover from many aspects, and inflation is part of it — it’s becoming stable,” said Tian. “The labor market continues to improve, our visitor industry continues to recover, construction is actually doing really good.”
