Inflation in Honolulu saw a small increase in the second half of last year, indicating a slow climb out of the economic bottom.

The Consumer Price Index increased 0.7 percent from the second half of 2008 and 1.7 percent from the first half of last year, according to the latest semiannual report issued by the U.S. Bureau of Labor Statistics yesterday. Overall inflation rose 0.5 percent in 2009 from the previous year.

Some of the most drastic changes were in fuel costs, which were lower than they were in 2008's second half but saw big jumps as 2009 wound down.

Gasoline of all types saw an 11.2 percent drop from the second half of 2008 but a 28 percent increase from the first half of 2009.

“;It really reflects the earlier roller coaster the economy has been through,”; said Paul Brewbaker, principal of TZ Economics. “;It might've creeped into everything, but the place it really hits is household utility costs and motor fuel.”;

Overall transportation costs dropped 1.7 percent from the second half of 2008, then grew 8.9 percent from the first six months of 2009.

Utility costs fell 15.6 percent from the second half of 2009 but rose by 12.4 percent from the first half of last year.

Lex Brodie's Tire, Brake & Service Co. has seen business costs rise in nearly every category, said Mike Rizzo, assistant manager.

“;All of our costs have gone up, from payroll to benefits to unemployment compensation to the general cost of doing business,”; Rizzo said. “;We know firsthand that the economy is suffering, so we do what we can not to hurt our customers more.”;

Lex Brodie's is rolling out a new “;active family”; annual service package, which saves customers more than $200 on the cost of two annual checkups and even comes with two GreenFleet Hawaii pedometers and water bottles to promote walking, Rizzo said.

“;We know that the cost of keeping a car on the road has gone up,”; he said. “;We want to help customers get the most out of their investment.”;

Sheldon Acosta, a 17-year-old Pearl City resident, said he has noticed the prices for gas keep gyrating.

Acosta has been somewhat insulated from the latest rise in gas prices because his mother, Brenda, funds his gas; however, when gas prices are reasonable, there is more money for other stuff, he said.

Brenda Acosta said she has her eye on rising gas prices and that she keeps costs in hand by shopping as much as possible at the military commissary.

“;When gas prices rise, you really have to watch your budget,”; she said. “;I don't know how people survive in the local economy. You really have to shop the sales.”;

Kapolei resident Randall Castro just bought a 2010 Camaro but said that when he comes to town he generally drives his Honda Accord to save money on gas.

“;Overall, prices are pretty good. I'd say they were about even for me this year,”; Castro said, but added that he cuts costs when he can. “;I don't travel that much. I try to stay on the West side.”;

The index's overall 0.5 percent annual increase matches a previous forecast by Leroy Laney, First Hawaiian Bank's economics consultant and Hawaii Pacific University economics professor.

“;It's a very mild inflation, not surprising at all,”; Laney said.

Continued increases in sheltered costs, or the rental value of a home, make up a large part of Honolulu's year-over-year CPI. Overall shelter costs went up 2.2 percent in the second half of 2009 from the year-earlier period.

“;It is fair to say shelter represented roughly the same impact on the all-items increase as all the major expenditure categories combined,”; said Todd Johnson, an economist with the U.S. Bureau of Labor Statistics. “;Or, in other words, it provided half of the total increase.”;

Laney has forecasted 1 percent inflation for 2010. He said any price pressures would come externally, like a surge in oil prices driven by national and global recovery.

Hawaii took the economic blow better than most other states, he said. Tourism numbers have been low, but other states took larger hits in their respective industries, like automobile manufacturing or homebuilding.

“;It'll probably get better in the worst-hit regions of the economy faster than a place like Hawaii, which took the blow a bit better,”; Brewbaker said. “;The unemployment rates, the tourism statistics, they're not great, but they've actually stopped falling.”;

Honolulu's inflation rate was near 6 percent in 2006 during a booming local economy at that time. When “;things just fell off the cliff”; in 2008, Brewbaker said, the economy lost momentum “;at a speed we don't often observe.”;

Brewbaker had predicted a 0.2 percent drop in inflation for last year. His outlook is rosier for 2010, at about 2 percent, after what he called “;a notable recovery beginning to take shape in the second half of the year.”;

“;Knock on wood, we hope it continues,”; Brewbaker said. “;It's going to be a slow climb out.”;

Star-Bulletin reporter Allison Schaefers contributed to this report.