Has inflation finally been whipped?
Nationally, the Consumer Price Index fell by 0.1% from May to June. It’s the first monthly dip since May 2020 – when the big worry was coronavirus, not the cost of living.
June’s decline, plus a modest 3% US inflation rate during the past year, nudged some economists to claim that the worst bout of price problems in four decades may have been tamed.
Well, I’m guessing those analysts must shop differently because Southern California stats suggest there’s some work left to do with inflation.
And victory debate aside, no economic repair lauded today will erase the sting of what the surging cost of living of 2021-23 did to local household budgets.
To understand how the local cost of living is moving, my trusty spreadsheet created a Southern California price benchmark – combining CPIs for Los Angeles/Orange County, the Inland Empire and San Diego. The focus was on 2024’s first-half inflation rates compared with the pain of the previous three years.
And, yes, this math shows pricing progress. Southern California’s cost of all goods and services rose 3.5% in the past year after jumping 18% in the 2021-23 period.
Three big chunks of Southern California spending reveal that prices aren’t all moving in the same direction.
Start with “nondurables” — the goods you buy for quick consumption, such as food and fuel. Southern California prices are up only 2.2% in the past year, but this comes after a 22% surge over three years. These are challenging expenses to avoid for consumers.
Now “durables” – goods that last like vehicles, appliances or furniture – have been on sale recently: prices are off 3.4% in the past year compared to a 16% jump in 2021-23. Skittish shoppers are skipping these purchases.
Then there’s paying the folks that do stuff for Southern Californians, from haircuts to landscaping. This inflation isn’t budging, with a labor shortage keeping costs up. The cost of “services” (minus rent) is up 3.9% in the past year after rising 19% in the previous three years.
Contemplate the common household’s biggest expense, housing.
These Southern California costs, by CPI math, rose 4.5% the past year after increasing 18% in 2021-23.
Now there’s some good news in this niche. Electricity costs are down a smidgen, 0.3%, in the past year. Yet that doesn’t fully fix the 54% skyrocketing of 2021-23. Natural gas prices are 28% cheaper this year. However, heating fuel previously jumped 67%.
Or consider home furnishings and household operations. They’re 2% cheaper in 2024 after rising 15% in three years.
Southern Californians may wince less when they visit the grocery store.
The CPI says local groceries overall are only 1.5% costlier in 2024 after surging 21% in three years.
But going out to eat is even more painful to the wallet.
The CPI’s “food away from home” index shows Southern California dining is 6% pricier in the past year after rising 17% in the previous three years.
Travel has been costly – whether around town or getting away.
Southern California’s overall transportation expenses are 3.7% pricier in 2024 after a 30% three-year lift.
A big part of this is gasoline. Filling up cost 3.4% more this year, following a 60% surge in 2021-23.
At least what you drive is mildly cheaper as car lots are full of inventory.
Prices of new vehicles are off 1.7% this year after a 14% advance over three years. Used vehicles’ costs are down 5.6% in 2024 – a break from the 42% spike in the previous three years.
It’s a mixed picture for other slices of a Southern Californian budget.
Apparel: Off 1.4% this year compared with a 16% hike in the previous three years.
Education and communication: Up 1% this year after 6% gain.
Recreation: Up 1.3% this year after 12% gain.
Tuition and childcare: Up 2.3% this year after 10% gain.
Medical care: Up 3.9% this year after 11% advance.
Personal services: Up 4.3% this year after 22% gain.
Nothing will be done to bring back the prices of the good ol’ days, circa 2019.
So shoppers in Southern California and across the nation can at least root for policymakers to chill inflation further.
But note such an economic cooling could dampen local salaries, too.
Ponder the typical Southern California wage, according to the federal Employment Cost Index. It’s tried to keep pace with inflation: Up 4.9% in the past year after growing 16% in 2021-2023.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
