The overall inflation rate for LA-Orange County was 4.9% annual rate in December – the lowest in 15 months.
Southern California’s overall inflation picture is slowly improving, but the pain of paying the bills isn’t much easier.
December’s Consumer Price Index report offered meager hope for local household budgets whacked by soaring prices of most goods and services just as wage increases begin to slow.
The overall inflation rate for Los Angeles and Orange counties rose at a 4.9% annual rate in December – the lowest in 15 months – compared with a 7.4% jump for 2022 and a 3.8% rise in 2021. In Riverside and San Bernardino counties, where inflation is tracked bimonthly, consumer prices were rising 7.5% in November, the lowest in 14 months. Inland Empire inflation rose 8.7% for all of 2022 and 5.8% in 2021.
By the way, U.S. inflation declined to 6.5% in December, a cooling pace that’s now run for six months. But the over-analysis of the CPI’s tracking of a broad basket of goods and services can mask how inflation affects a household’s finances.
Remember, inflation has become a huge national economic problem due to numerous factors such as shortages of supplies and labor and too much government assistance for the pandemic’s economic crunch. These runaway prices forced the Federal Reserve to hike interest rates in an attempt to cool the economy and slow the advance of many prices.
But as families juggle expenses to pay the expanding bills, fears percolate that the Fed’s chilling rate hikes could become a job-killing recession.
Look at cost categories tracked by the CPI on a local basis every month, and you’ll see December’s inflation was only slightly slower than the wallop to the wallet consumers suffered all year.
Just take the trip to a Southern California supermarket. Grocers have upped their prices as commodity, labor and transportation costs have soared. And then there are eggs, which have seen prices skyrocket due to an unprecedented bout of avian flu that’s decimated egg-laying hens.
In L.A.-O.C., the CPI’s “food at home” category showed prices rose at an 8.8% annual rate in December. That was a slight improvement compared with the full year’s 10.7% grocery inflation that came after a 4.6% jump in 2021.
Grocery shopping in the Inland Empire was costlier, too. Food inflation was 10.1% in December, capping a year in which grocery costs soared 10.6% after rising 5% for all of 2021.
Running the rest of the household isn’t any cheaper either.
There’s pocketbook pain when you turn on the lights, appliances or home electronics.
Electricity costs in L.A.-O.C. rose at an 8.6% annual rate in December, ending the year with 12.1% average power inflation. That followed a 12.5% jump in 2021. Inland Empire electricity rose at an 11% annual rate in December, part of a year in which electricity was 15.9% pricier after rising 18% in 2021.
And it’s far more expensive to heat a home or cook on the stove if you use natural gas.
This L.A.-O.C. utility service was up at a 26.7% yearly rate in December vs. a 22.9% gain for all of 2022 and 14.7% in 2021. Inland Empire natural-gas inflation was 24.3% in a year as of December vs. a 21.1% jump for all of 2022 and 14% in 2021.
And then there’s rent, which has become a much-debated inflation matter for statistically technical reasons.
By CPI math, L.A.-O.C. rents were rising at a 5.2% annual rate in December – that’s above the 4.4% gains for all of 2022 and 1.2% increases in 2021. Inland Empire rents were up at a 10.4% annual pace in December and rose 8.4% for all of 2022. That followed a 3% jump in 2021.
Critics complain CPI math is missing what landlords charge for new leases, prices that fell in many places in late 2022.
December’s good news for shoppers is gasoline.
Pump prices in L.A.-O.C. were 2.3% below December 2021, though to be fair, that dip didn’t put much of a dent the full year’s 32% gain that followed a 31% bump in 2021.
Inland Empire gas prices dropped at a 4% annual rate in December, capping a year where prices gained 32.5% after jumping 31% in 2021.
Inflation’s big bite comes as generous pay hikes linked to record-low unemployment are evaporating for many workers.
Consider the annual increase in weekly wages as of June 2022 in the region’s four counties, all trailing inflation’s pace as shown in a federal employment database.
Los Angeles (2.5% vs. 5% in the previous 12 months), Orange (2.3% vs. 4%), Riverside (2.3% vs. 7.1%) and San Bernardino (3.6% vs. 6%).
Oddly, smaller raises won’t help pay your bills – but as an overall trend, economic theory suggests slowing pay hikes can help chill the inflation rate.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
