Metro Denver’s inflation rate is coming down, but not as quickly as it is in other major cities or in the country as a whole, with stubborn housing and energy costs largely to blame, according to a bimonthly update Thursday from the U.S. Bureau of Labor Statistics.
The Consumer Price Index for Denver-Aurora-Lakewood was running at an annual rate of 4.7% through the end of July. That was down from a 5.1% annual rate in May, a 5.7% rate in March and a 6.4% pace in January.
That decline would be something to cheer about, except that the annual U.S. inflation rate was also at 6.4% in January, got down to 3% in June, and bounced back a little to 3.2% in July, according to the BLS.
After Miami at 6.9% and Tampa-St. Petersburg, Fla., at a 5.7% rate, metro Denver and Detroit have the highest rate of consumer inflation this summer, at 4.7%.
Housing costs represent 44% of the basket of goods used to measure the CPI in metro Denver, a heavier weighting than in the country as a whole. After what seemed like a respite earlier in the year, housing costs are rising again because of an ongoing imbalance between supply and demand and a jump in interest rates.
“We have higher price inflation on housing than the nation overall,” said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado’s Leeds School of Business.
Housing costs, which include shelter and utilities, are up 8.8% in metro Denver over the past 12 months vs. 6.2% nationally. Shelter, which includes rent and an equivalent of rent for homeowners, was up 9.5% year over year in metro Denver and 7.7% nationally.
A really wide gap has opened up with household energy costs, which include natural gas and electricity. Those were up 14.8% in metro Denver the past year but are down 2.4% nationally. Electricity prices are flat, so the spike appears to be coming from natural gas prices.
Transportation is the second-biggest category in terms of its weighting in the CPI, and metro Denver is up 1.4% vs. a 3% decline nationally. Gasoline costs are down 20% nationally and 18.3% in metro Denver, and vehicle prices are down 0.5% nationally and up 0.5% in metro Denver.
But metro Denver is diverging sharply when it comes to gasoline prices this summer. Those are up 13.5% since May, more than 10 times the increase of 1.3% seen nationally, according to the BLS.
Metro Denver residents are getting a little bit of a break when it comes to food prices, which are up 4.2% locally and 4.9% nationally. But that advantage didn’t carry over into eating out. Costs there are 7.8% higher in metro Denver and up 7.1% nationally over the past year.
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