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Isle prices
climb 1.6%
It's another sign Hawaii's
By Rob Perez
economy is growing,
local economists say
Star-Bulletin
Inflation on Oahu surged a surprising 1.6 percent in the last half of 1999, largely because housing prices stopped falling, the federal government reported today.
For all of 1999, consumer prices locally rose 1 percent, the biggest gain since 1996, according to the Bureau of Labor Statistics.
The increase in Honolulu's Consumer Price Index contrasted with a 0.2 percent drop last year and was another sign Hawaii's economy is growing, economists said.
Leroy Laney, a Hawaii Pacific University economics professor, said the 0.2 percent increase in housing prices last year compared with a year earlier was an especially telling signal.
"That's a sign of genuine improvement in the economy," Laney said.
Housing represents about 40 percent of the index. The housing price increase was Oahu's first since the last half of 1997, when that component rose 0.1 percent.
Both Laney and Pearl Imada Iboshi, the state's chief economist, were surprised by the overall index's 1.6 percent rise from the last half of 1998.
"Although we expected inflation to increase, we didn't expect it to increase by quite that much," Iboshi said.
Both expected the index to rise less than 1 percent.
Compared with the first half of 1999, Honolulu prices were up only 0.6 percent.
Nationally, inflation rose 2.2 percent for all of last year.
Iboshi said the local increase indicated demand for goods and services was getting stronger, a positive sign for the economy.
Laney said the numbers show Hawaii is returning to an inflationary trend that is more in line with the national economy.
The bureau said prices increases on Oahu were evident in most categories of the index.
The only significant downward pressure came in apparel prices, which dropped 2.9 percent from a year earlier.
Gasoline prices, which have been rising, were sharply lower in 1999, helping keep Hawaii's overall transportation costs in check.
The CPI report shows that second-half 1999 transportation costs fell 0.2 percent from the first half of the year but rose 0.1 percent compared with a year earlier.
Second-half 1999 food and beverage prices jumped 3.4 percent from a year earlier, but Laney said he wouldn't put much stock in that statistic, given the volatility of food prices.
Grocery prices increased 3.8 percent, while the cost of eating out posted a 4 percent gain.
Medical costs nudged up 0.7 percent, while education and communication prices surged 7.2 percent, the bureau said.
At 7.5 percent, the biggest gain among the main categories came from other goods and services.
