Already one of the most expensive places to live in the country, Hawaii became even costlier during the past 12 months with energy and food fueling a 6% increase in Honolulu area consumer prices.
Honolulu’s rising inflation follows a similar trend nationally where U.S. prices jumped 7.5% over the past year for its largest 12-month increase since February 1982, according to a report issued Thursday from the U.S. Department of Labor.
Energy prices in Honolulu soared 32.3% over the year while food costs rose 8.4%. The prices for used cars and trucks skyrocketed 38.4% during the same time frame.
The 6% inflation rate was the highest for Honolulu since it ended 1991 with
an annual rate of 7.2%. The federal data does not include other Hawaii counties because of the size of their populations.
“It’s alarming because we expected inflation for the first half of this year would be 5%. It’s higher than we expected,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism.
While U.S. inflation
was the highest in nearly
40 years, Tian said there was no way to make a similar comparison for Honolulu since the Labor Department in 2017 began releasing its local data every two months rather than at half-year and full-year intervals. The
Honolulu data released Thursday was for the period ending in January and
covered the previous two months as well as the price difference from January 2021. Honolulu prices were up 0.9% over the past two months.
Tian said the increase
in inflation was driven by higher energy costs, with the price of unleaded gas jumping 40.1%, and more expensive commodities, such as food, furniture and construction materials, that were inflated due to supply chain constraints.
“Higher inflation will make consumers worse off because with the same amount of money, consumers won’t be able to buy the same amount of goods and services they purchased last year,” Tian said. “That’s why the Federal Reserve wants to control inflation.”
Tian said it’s likely that the Fed will aggressively increase interest rates to cool down the economy.
“The process is slow, and they may have to increase the interest rate at every meeting of the Federal Reserve,” Tian said. “They don’t know what the impact will be for every quarter-
point increase, so they have to wait and see what happens to the inflation rate and the economy.”
