Friday, February 21, 2003

Home prices
boost local cost
of living

Most other items in the
Honolulu Consumer Price Index
declined in the second half
of 2002

By Russ Lynch

Except for the upsurge in home prices that has been making news for months, Honolulu consumer prices declined in the second half of last year.

Including housing costs, a typical selection of goods and services cost 1 percent more in the latest half-year than a year earlier, the federal Bureau of Labor Statistics said today.

Housing, which makes up about 42 percent of the sample the government uses, was up 1.5 percent year over year, with rent and purchase-price costs up 2.1 percent.

The price of clothing, which makes up a little more than 5 percent of the Honolulu "market basket," was down 3.1 percent. Prices for food and beverages, which make up a little more than 16 percent of the sample, were up 0.5 percent.

Consumer Price Index

The Honolulu CPI measures the change in prices in the local market, based on a baseline set at $100 in the 1982-84 period.

2nd half

2nd half %

2002 2001 change

All items 180.4 178.7 1.0

Food & beverages 171.6 170.7 0.5

Housing 181.9 179.3 1.5

Apparel 99.1 102.3 -3.1

Transportation 170.1 173.0 -1.7

Source: U.S. Department of Labor, Bureau of Labor Statistics

Gasoline prices were down 9.4 percent year over year. Gasoline is about 3 percent of the Honolulu market basket.

Looking at prices for all Honolulu urban consumers, the bureau's semiannual report said inflation in Honolulu is running at an annual average of 1.1 percent. The U.S. city annual average is up 1.5 percent.

"It's still very low inflation," said Leroy Laney, an economics professor at Hawaii Pacific University. "Inflation is not any threat to the local economy, unlike some previous times.

"In the future, we might see some increase to the housing component, if home prices continue to creep up and that gets worked into shelter costs."

Shelter, which includes rent or mortgage payments, plus utilities and costs of household fuels, as well as furnishings and other costs of maintaining a residence, equals about 35 percent of the total Honolulu market basket. The shelter component for Honolulu in the latest half-year was up 1.5 percent from a year earlier.

The latest consumer price index report did not include a year-over-year comparison for medical costs because the figures were not reported in 2001, due a small sample size.

However, the medical-care index stood at 266.5, meaning that services that cost $100 in the 1982-84 base period now cost $266.50. The last time it was published, for the first half of 2001, the medical-care index was at 246.1. Medical care is about 6 percent of the total Honolulu consumer index.

The overall Honolulu consumer price index was at 180.4 in the latest period, compared to 178.7 in the second half of 2001.

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