Metro Denver consumer prices are inflating at the fastest rate since 1983, putting a squeeze on household budgets that will be harder to escape, according to a bimonthly update from the U.S. Bureau of Labor Statistics on Friday.
The Consumer Price Index for the Denver-Aurora-Lakewood area rose 6.5% over the past year in November, which is up from a 4.5% annual pace in September and a 3.5% annual pace in July.
It marks the highest inflation rate measured in metro Denver since a 6.8% annual increase in May 1983.
Metro Denver’s inflation rate came in below the 6.8% annual pace measured nationally in November. That rate was the highest in 39 years.
“If you are younger than 40 years old, then you have never experienced such high inflation,” said Lawrence Yun, chief economist with the National Association of Realtors, in comments on Friday’s inflation numbers.
Yun expects that rising inflation could force the Federal Reserve to push up interest rates, which in turn could drive up housing costs, the largest cost category for consumers, via higher mortgage rates. The cost for shelter is up 4.9% the past year in metro Denver.
Gasoline prices are the source of the greatest sticker shock up 63.9% the past year. But gasoline prices were down 3.3% between September and November, a sign they may have topped out.
But price increases are coming in another energy commodity — natural gas. Although the Denver index doesn’t itemize natural gas, prices are up 25% nationally and household energy costs are up 7.5%, while electricity costs are up a more modest 2.4%.
Used car prices continue to defy gravity, up 32.6% over the past year and 5.2% the past two months alone, a sign that shortages in the vehicle market don’t appear to be easing.
A separate study from iSeeCars.com, a vehicle search engine, estimates used car prices are up 23.5% year-over-year in metro Denver, which has added $6,082 in additional costs compared to a comparable sale a year earlier.
The food price index for Denver was up 4.4% the past year, with food at home costs up 2.8% and the cost of eating out up 6.7%.
Among food items, price increases were highest for meat, poultry, fish and eggs, up 6.5%, followed by baked products and cereals, up 3.6%. Dairy products were nearly flat, up 0.3%, while prices for fruits and vegetables were down 1.2% the past year.
Other areas with annual price gains above the 6.5% overall inflation rate include auto insurance, up 6.7%; clothing, up 8.1%; non-durable goods, not including food, up 17.1% and durable or long-lasting goods up 10.9%.
Core inflation, or consumer items less energy and foods, is up 5.2%.
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