Consumer inflation has crossed 9% in metro Denver in March, the biggest annual jump in prices the region has experienced in 40 years, according to an update Tuesday from the U.S. Bureau of Labor Statistics.
The Consumer Price Index for All Urban Consumers for the Denver-Aurora-Lakewood area rose 2% between January and March, pushing the annual consumer inflation rate to 9.1%, up from January’s 7.9% annual rate and ahead of the U.S. rate of 8.5%. A year ago, local inflation was running a tamer 1.6% in the region,
In February and March, Denver’s food index increased 0.8%, while the energy index advanced 15%, noted BLS Regional Commissioner Michael Hirniak in a release. For the year, food inflation is running at 9.1%, matching the overall rate, and energy costs are up 28.1%.
The cost of eating out is up by 10.2% over the past year, while grocery store prices are up 8.2%, including a 14.5% gain in the cost of meat and poultry and a 7.3% gain in cereals and baked goods. Rising costs are squeezing consumers and generating pushback against retailers, said Matt Pavich, senior director of retail innovation at Revionics, in an email.
Inflation has been on the march since spring of last year as demand outstripped supply in a recovering economy. Russia’s invasion of Ukraine in late February sent oil prices spiking above $100 a barrel and has also resulted in higher prices for wheat, corn, barley, and other food commodities grown in that region, as well as fertilizers.
“The average Colorado household spent $4,467 more since 2020 because of inflation,” said Steven Byers, a senior economist with the Common Sense Institute, in an analysis of the inflation numbers.
Energy costs are where inflation is hammering consumers the hardest, with the prices at the pump up 19.9% over the past two months and 36% over the past year. Electricity prices, which were relatively stable last year, are up 12.4% the past two months and 15.1% the past year after natural gas, which is used to generate power, become more expensive following Russia’s invasion.
Higher gasoline costs combined with a 38.8% increase in used car prices the past year are driving a 20.6% increase in private transportation costs.
Core inflation, which removes volatile food and energy prices, rose 1.4% over the two months and is up 8% on the year in the Denver area. The only core category without inflation the past year was education and communication, down 1.6%.
Economists are concerned that sustained inflation could spill into housing costs, which are the largest category of consumer spending. Rents are up 6.5% over the year, while an equivalent measure for homeownership costs are up 6.9% in metro Denver.
“Aggressive inflation will force the Federal Reserve to raise interest rates multiple rounds this year and actively pursue quantitative tightening. That is why mortgage rates recently have shot up so high,” said Lawrence Yun, chief economist with the National Association of Realtors in comments on the CPI report. “Higher mortgage rates will inevitably pull home sales down in the coming months and slow home price appreciation.”
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