Flat rents and moderating food costs weren’t enough to prevent a spike in gasoline prices from driving a four-fold increase in metro Denver’s previously subdued inflation rate last month, according to an update from the U.S. Bureau of Labor Statistics.
Consumer inflation in the Denver-Aurora-Lakewood area, which is measured every two months, accelerated at a 1.6% annual pace in March, up from a 0.4% annual pace in January and a 0.3% pace in November.
Denver’s inflation remains below the 2% pace averaged last year and the 2.6% annual pace measured in the U.S. in March. It isn’t raging, but after going dormant, inflation is increasing in ways consumers will notice.
As anyone filling up the tank lately knows, gasoline prices aren’t where they were last year. Motor fuel costs in metro Denver are up 35.3% from March 2020 and up 22.1% from January, according to the BLS. Electricity prices are also on the rise, and energy costs of all types are up 18.6% year-over-year.
Hard hit by an oil price collapse early last year, U.S. producers struggled to boost oil output, which remains down by about 2 million barrels per day compared to before the pandemic. February’s deep freeze on Texas oil fields and fears of tighter regulations under a Biden administration have only added to the industry’s woes.
OPEC has stayed disciplined in enforcing production curbs, contributing to higher oil prices globally. And with COVID-19 restrictions loosening in many countries, people are driving more. That higher demand overlaps with the spring surge gasoline prices usually undergo this time of year in the U.S.
Other areas with high inflation are clothing, up 17.8%, and used cars, up 8.5%. New car prices in metro Denver are down 7.9%, as cash-strapped consumers gravitate toward more affordable transportation options.
Rents are flat year-over-year but are now rising again in 2021.
The report did contain good news for households struggling to put food on the table. Denver’s food price index remains up 1.8% annually, but it fell 0.8% between January and March.
Food prices are finally moderating, with more food indexes starting to show annual declines, including dairy, down 2.3%; fruits and vegetables, down 2.2%, and nonalcoholic beverages, down 1.3%.
Meat, poultry, fish and egg prices remain up an uncomfortable 5.7% annually, but prices there have declined 1.4% since January. Alcoholic beverages remain up 1.4% on the year, but prices there are also moderating, with a 1.2% decline in 2021.
But year-over-year comparisons are complicated by the pandemic. Consumers emptied grocery shelves at a frenzied pace in March 2020 and supply chains struggled as restaurants closed and more food was consumed at home.
The cost of eating out is up 2.3% on the year in metro Denver, with increases outpacing overall inflation.
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