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Consumer prices
jumped 1.7% in
second half of 2000

Gasoline prices had
their biggest increase in
more than 20 years

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By Russ Lynch
Star-Bulletin

The largest annual increase in gasoline prices in more than 20 years pushed Honolulu consumer prices up 1.7 percent in the second half of last year, compared with the second half of 1999.

The federal Bureau of Labor Statistics said Honolulu gasoline prices rose 26 percent year-over-year, the highest climb since a 26.8 percent rise in November 1980.

Prices for a number of other goods and services were flat or down, however, and the local annual increase in the Consumer Price Index was half the national average of 3.4 percent and less than half the Western region year-over-year increase of 3.5 percent.

The consumer survey indicates that the Hawaii economy is in a slow-growth mode and a separate report from the state government says the rate of growth will be slower in the second half of this year.

The Leading Economic Indicator report from the state Department of Business, Economic Development & Tourism, which looks at 10 local, national and international factors that lead to economic changes in Hawaii, said six of the components declined and four rose.

Analysis of figures from November showed that while the number of real estate transactions and the prices paid for real estate were on the way up, the value of construction permits fell.

Economist David Ramsour, who lives in Texas but advises consultancy clients regularly in the Hawaii economy, said the small increase in Honolulu prices is the result of deflationary pressures through the 1980s and the 1990s.

He said he suspects that the inflation number might even be lower than the BLS calculates, because of the near impossibility of measuring the price of a host of services, such as the cost of a haircut.

Small price increases in some businesses and declines in others do impede growth in the economy, Ramsour said.

"What drives businesses to expand and grow is the prospect that the price for something they produce or sell is going up," he said.

Fuel costs pushed up the overall cost of both housing and transportation but food and beverage prices were up only slightly and clothing prices were down, according to the half-yearly survey of Honolulu prices.

Transportation had the biggest year-over-year cost increase, with prices in the second half of 2000 up 5.9 percent from the second half of 1999.

Overall housing costs were up 1.4 percent, boosted by a 9.5 percent rise in the cost of household fuels and utility services and a 3.5 percent price rise in the bracket that wraps together the price of household furnishings and other home operating costs. Medical care costs were up 5.3 percent from the year-earlier period.

On the positive side, clothing costs in Honolulu were down 2.2 percent and food and beverage prices were up only 0.4 percent compared with the second half of 1999. The cost of eating at home was down 0.7 percent and dining out cost 0.5 percent more.

Consumers of alcoholic beverages had to dig deeper in their pockets, faced with a 2.8 percent year-over-year cost increase.

Comparing the second half of last year with the first half, Honolulu prices were up only 0.5 percent.

The BLS, part of the U.S. Department of Labor, reports Honolulu consumer price statistics twice a year, based on shopping surveys conducted locally under direction from a regional office in San Francisco. The next report is due in August.