Denver area inflation falls to 6.4%

Gasoline prices return to $4 level

BY TAMARA CHUANG THE COLORADO SUN

Price relief at home? Not quite yet, according to the latest Consumer Price Index for the Denver area.

e one-year change in CPI, aka in ation, slowed its pace to 6.4% in January, which happened to be the same as the U.S. at’s lower than the 6.9% in November for Denver and 7.1% in the U.S. But that 6.4% means consumer prices are not only still growing, in ation is still at a 40year high.

Nearly everything that contributes to the index was more expensive in January than it was a year earlier in Denver. Nonalcoholic beverages?

Up 16.7%. Breakfast cereal? Up 14%. Fruits and vegetables? Up 12.9%. Household energy? Up 13.4%.

Add in the in ation from the prior year and the double-digit increases likely match what consumers have been feeling for the past couple of years — or at least some consumers. While government relief helped many people and businesses get through the pandemic, the severe disruptions resulted in job losses, aggravated supply chain issues and changed consumer demand. e higher prices are being felt unequally, especially if someone is a homeowner or a renter, works remotely or in person, or hasn’t seen their paycheck increase at the same rate.

“Earnings are going up about 5% roughly in the United States. But that means we’ve lost ground. We basically have had negative income for the last couple of years. And that’s hard,” said Stephan Weiler, an economics professor and codirector of the Regional Economic Development Institute at Colorado State University. “I mean people get excited about a 3% raise or 5% raise. Unfortunately, it’s not even keeping up with in ation. And that doesn’t go away. ese prices stay higher. It’s fairly rare that prices come down.”

One item did drop in the past year: Used car prices, down 10.6% from a year earlier. But if you recall, a shortage of vehicles pushed used car prices up 43.4% by January 2022. e auto industry is still recovering. Here’s how in ation a ected di erent types of purchases for the past two years.

As a reminder, the Bureau of Labor Statistics doesn’t track in ation by state. It doesn’t have the resources, we’ve been told. e change in CPI is recorded nationwide and in nine Census divisions and certain metro areas, including Denver.

Rising the fastest since November was the cost of apparel and recreation, which were so much higher than other categories that the BLS pointed them out.

Apparel costs had ratcheted up by double-digit increases for several months in 2021 as people headed back to work at the o ce or just got dressed to go out in public. However, the 8.5% higher cost for apparel in January was actually slower than the rate a year ago.

As for why Coloradans are spending more on recreation, that’s likely seasonal, said Julie Percival, a BLS regional economist. ere are above-normal levels of snow in the mountains and this is, afterall, Colorado “with a lot of people taking advantage of going out to recreation facilities at this point in time,” she said. Recreation costs increased 4.7% since November and 7.7% in the past year.

And then there are gas prices. e cost of gasoline is typically less in Colorado than in other states, thanks to lower fuel taxes. And until late 2022, the Front Range bene ted from an oil re nery in Denver’s backyard that produced 98,000 barrels of gasoline and petroleum products a day. Since Suncor’s re nery in Commerce City temporarily closed in December after a re damaged equipment, gas prices have shot up. Without the extra supply, Denverarea gas prices reached $4.08 this week, up nearly $1 a gallon since before Christmas, according to AAA Colorado. Nationwide, a gallon of regular averaged $3.42.

It’s still about housing costs

But higher gas prices have less impact on CPI than you’d think, Weiler said. at’s because it’s just a small part of the overall basket of goods that the BLS calculates the change in prices. Gas is about 3%, according to its o cial “weight.” ose higher egg prices? Onesixteenth of a percent. It’s the larger items, like rent or a mortgage, where small increases can make or break a consumer’s budget. Housing, for example, is one-third of a household’s monthly budget.

“Shelter is a big deal. It’s a fullthird of what the index is composed of,” Weiler said. “It’s just in a nick of time that housing prices are beginning to mellow. Otherwise, with that 33% weight, shelter could have us ahead of the United States in ation rate pretty quickly.”

Home sales have slowed as interest rates added hundreds of dollars to a monthly mortgage payment. at priced many renters out of the market and home prices in Colorado have attened, with the state’s median sales price unchanged from a year ago at $520,000. Median prices in the Denver metro were down 1.4% from a year-ago in January.

But Denver’s cost of housing still went up 10% in January overall. at’s because CPI takes into account the new cost of homeownership and buying a house at interest rates that are double what they were a year ago. For existing homeowners, housing costs probably didn’t budge much in the past year. Between the two groups, home owners saw a 9.2% increase in costs.

Meanwhile, renters paid even more, or approximately 12.7% compared to a year-ago January. at increase is roughly a third more than what homeowners experienced. In other words, if new homeowners are saddled with a mortgage that is $100 higher than what it would have been a year ago, renters are paying $133 more.

“Rent is pushing up faster than what they call the ‘owners’ equivalent of rent,’” Weiler said. “So, yes, people who don’t own are experiencing faster in ation than people who own homes. And that’s a pretty big di erence — a 33% greater cost basically.” is story is from e Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support e Colorado Sun, visit coloradosun. com. e Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media.