HONOLULU (AP) — Federal statistics show Honolulu inflation doubled to 2 percent last year, but state economists say the inflation rate is still lower than Hawaii’s historical average.
HONOLULU (AP) — Federal statistics show Honolulu inflation doubled to 2 percent last year, but state economists say the inflation rate is still lower than Hawaii’s historical average.
Economist Eugene Tian said consumers’ purchasing power remains strong despite the jump because of rising personal income and an inflation rate that’s lower than the 2.2 percent average from 1995 to 2015.
The consumer price index — the most widely used measure of inflation —for Honolulu last year increased from 1 percent in 2015. Last year marked the city’s largest year-over-year increase for inflation since it grew by 2.4 percent in 2012, according to data released Wednesday by the U.S. Bureau of Labor Statistics.
“Consumers’ money still has higher purchasing power because DBEDT’s (Department of Business, Economic Development and Tourism) estimate for personal income growth is 4.9 percent for 2016. So if you’re looking at 2 percent inflation, consumers still have 2.9 percent of real (inflation-adjusted) income,” Tian said.
Tian, the chief economist for the department, said the increase in inflation “is not surprising” because the drop in energy prices from 2015 to 2016 wasn’t as large as it was during the previous one-year period.
Energy prices rose during the second half of 2016 from the first half, with the cost of gasoline up 11.1 percent and electricity up 5.1 percent, the Honolulu Star-Advertiser reported (https://bit.ly/2k9EGdZ ).
According to the federal data, Hawaii exceeded the average U.S. inflation rate of 1.3 percent for 2016. The state has had a higher inflation rate than the U.S. every year since 2004 with the exception of 2014.