According to an update from the US Bureau of Labor Statistics, flat rents and a reduction in food costs were not enough to prevent gasoline prices from rising, causing a four-fold increase in Metro Denver’s previously subdued inflation rate last month.
Bimonthly measured consumer inflation in the Denver-Aurora-Lakewood area accelerated 1.6% per annum in March, up from 0.4% in January and 0.3% in November.
Denver inflation remains below last year’s averaged pace of 2% and the US annual rate of 2.6% in March. It’s not raging, but after the stall, inflation rises in a way that consumers will notice.
As anyone who has been filling up their tanks lately knows, gasoline prices are not where they were last year. Fuel costs on the Denver Metro are up 35.3% from March 2020 and 22.1% from January, according to BLS. Electricity prices are also rising and energy costs of all kinds have increased by 18.6% compared to the previous year.
Badly hit by a drop in oil prices early last year, US producers struggled to boost oil production, which has declined by around 2 million barrels a day compared to before the pandemic. The freezing of Texas oil fields in February and fears of more stringent regulations under a Biden administration only compounded the industry’s problems.
OPEC has remained disciplined in enforcing production restrictions and has contributed to higher oil prices around the world. And as COVID-19 restrictions relax in many countries, people are driving more. This higher demand coincides with spring gasoline prices that typically occur in the US at this time of year
Other areas of high inflation are clothing, up 17.8%, and used cars, up 8.5%. New car prices on the Denver subway are down 7.9% as cash-strapped consumers gravitate towards cheaper transportation options.
Rents are unchanged year-on-year, but will now rise again in 2021.
The report contained good news for households struggling to put food on the table. The Denver food price index continues to rise 1.8% annually, but fell 0.8% between January and March.
Food prices are finally falling, and more food indices are showing a 2.3% annual decline, including dairy products. Fruit and vegetables by 2.2% and soft drinks by 1.3%.
Meat, poultry, fish and egg prices continue to rise an uncomfortable 5.7% a year, but prices there have fallen 1.4% since January. Alcoholic beverages continued to grow 1.4% year over year, but prices are also moderate, with a 1.2% decline in 2021.
However, year-on-year comparisons are made more difficult by the pandemic. Consumers emptied grocery shelves at a breakneck pace in March 2020 and supply chains struggled when restaurants closed and more food was consumed at home.
The cost of eating out on the Denver Metro is up 2.3% year over year, with the increase outpacing headline inflation.