Honolulu’s inflation rate ebbed a bit in June and July from the previous two months, but prices for goods and services are still broadly rising, a new government report shows.
The U.S. Bureau of Labor Statistics said in a report released Wednesday that consumer prices on Oahu ticked up 0.6% in June and July from April and May.
This increase represented a second consecutive contraction in the size of Honolulu’s bimonthly inflation rate. The increase in April and May was 1.6%, which was smaller than a 2.4% rise in February and March. Honolulu’s inflation rate for December and January was 0.9%.
Still, inflation for Hawaii’s most populous county is still historically high at 6.7% for the first half of this year, and 6.8% for a 12-month period through July, according to the BLS report.
The last time inflation in Honolulu was higher for a full year was 1991 at 7.2%. Inflation last year was 3.8% after two years at 1.6%.
“Everything is costing more,” said Dy Chow of Kapahulu. “It’s definitely affected a lot of people.”
The BLS report said transportation costs were the biggest driver of inflation on Oahu during the 12 months through July with a 16% jump. This was driven mainly by the price of gasoline being up 36.4%.
A gallon of regular gasoline in Honolulu cost $5.31 on average Wednesday, up from $4.02 a year earlier but down from $5.52 a month ago, according to AAA.
Prices for food and beverages were up 9.7%, followed by a 9.6% increase for medical care to round out the three categories with the biggest price increases.
The cost of housing in Honolulu was up 3.9% during the 12 months through July, which includes a 34.6% increase in the price of electricity. Rent for primary residences was up 4% while the cost of homeownership was up 1.5%.
One good thing in the report from the perspective of Honolulu consumers is that the local inflation rate of 6.7% for the first half of this year is lower than the national average of 8.3%.
Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism, said in June that he expected Honolulu’s inflation rate would come down in part due to the Federal Reserve hiking its benchmark interest rate by three-quarters of a percentage point in June.
The unusually large interest rate move was an effort to curb inflation and spending by making it more expensive for consumers and businesses to borrow money.
On July 27, the Fed implemented another three-quarter-point increase as it tries to bring down U.S. inflation to around 2%, which many economists don’t expect will happen next year.
Chow doesn’t expect an end to lofty prices given continuing problems with the global supply of many goods and high raw material costs that are leading businesses to raise prices.
“Everybody has to spend more,” she said.
The University of Hawaii Economic Research Organization in May forecast that Honolulu’s inflation rate would be 6.7% this year and then drop to 4.0% next year and then to 2.0% in 2024.
BY THE NUMBERS
$5.31
Average cost for a gallon of regular gasoline Wednesday in Honolulu
9.7%
Increase in price for food and beverages
9.6%
Increase in costs for medical care
