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Why did Southern California inflation hit pandemic era highs? – Press Enterprise


If you’ve been grocery shopping or pumping gasoline lately you’re keenly aware of a painful part the pandemic era’s economic turnabout: Inflation is back.

Let me say for the inflation-phobic types, we’re not talking about the wild 1970s kind of price hikes. But the pandemic’s loosening grip on the economy has translated to a rising cost of living in Southern California and the nation — especially for numerous household staples.

The bottom line is that March’s Consumer Price Index showed inflation rates are now above year-ago levels when the coronavirus was first throttling business and making discounting a popular sales trick.

The Inland Empire’s inflation rate was 3.6% last month vs. 2.3% a year earlier. The CPI for Los Angeles and Orange counties rose at a 2.2% annual pace in March vs. 1.9% a year earlier, and nationally it was 2.6% compared with 1.5% in March 2020.

Remember, inflation often reflects economic performance. And this gap between Inland Empire price hikes and L.A.-O.C. is a reminder that the economies of Riverside and San Bernardino counties are not just a regional hot spot, they’re high on national rankings, too.

The past year’s coronavirus-induced business challenges essentially halved inflation. Price cuts were the norm as merchants shut or juggled various health mandates slowing the pandemic’s spread. It didn’t help that both skittish consumers and antsy corporate leaders were reluctant to spend.

Consider how that chilled inflation rates. In 12 months ended in February, the L.A.-O.C. cost of living increased on average by just 1.3% compared with 3.1% in the previous 12 months. It was 1.8% vs. 2.9% in the Inland Empire and 1.1% vs. 2% nationally.

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So what’s reheating inflation in 2021? Basically, we can blame good news on the medical and economic fronts. With consumer confidence back at pre-pandemic levels, shoppers and bosses have resumed spending in a surge of demand that gives merchants (not to mention their suppliers) the ability to increase prices.

Ponder some frequent consumer purchases as measured by the CPI and March’s 12-month increases. Start with some eye-catching food costs spikes …

Groceries: In the Inland Empire, food for the home is 7% more expensive in a year vs. 3.5% in L.A.-O.C. More home-cooked meals with less commuting as work from home grew.

Dining out: L.A.-O.C.’s up 4.1% vs. 2.9% in the Inland Empire. Coastal folks like their restaurants.

Alcoholic beverages: L.A.-O.C.’s up 11.1% vs. 4.7% in the Inland Empire. Perhaps life’s easier inland?

Energy has become even pricier …

Gasoline, all blends: L.A.-O.C. drivers are paying 15.4% more vs. 14.9% in the Inland Empire. Every driver knows this.

Household energy: Ugh on utility bills: Inland Empire’s up 18.6% vs. 14% in L.A.-O.C.

The cost of putting a roof over one’s head is growing modestly, relatively speaking …

Housing, overall costs: Inland Empire’s up 2.8% vs. 1.7% in L.A.-O.C. This number doesn’t including the rising cost of buying.

Rent: Inland Empire’s up 1.8% vs. 0.9% in L.A.-O.C. Other stats hint landlords are regaining pricing power.

Buying transportation’s a odd situation because dealerships have few new cars to sell so old one’s become hot wheels …

Used vehicles: Both SoCal metros see 8.7% price hikes.

New vehicles: Inland Empire prices rose 0.5% vs. 0.1% in L.A.-O.C.

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Other household needs have mixed results …

Apparel: Inland Empire clothing is 4.8% pricier vs. 1.7% in L.A.-O.C. Return to in-person working and schooling is a possible factor.

Medical care: Inland Empire’s up 3.8% vs. 1.1% in L.A.-O.C.

School fees, child care: Inland Empire’s up 2% vs. a 2.5% drop in L.A.-O.C.

Recreation: Inland Empire is down 0.2% vs. a 1.9% drop in L.A.-O.C. Reopenings of “fun’ businesses may change this!

One final thought: Rising inflation may put pressure on the Federal Reserve to change course and allow interest rates to rise. That would increase borrowing costs and could cool a hot housing market.

Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at jlansner@scng.com



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