Posted at 11:10 a.m., Thursday, August 16, 2001

Honolulu consumer prices reflect weak demand

By Susan Hooper
Advertiser Staff Writer

Consumer prices in Honolulu rose a scant 0.8 percent from January to June, offering one more sign of weakness in the local economy.

"It definitely does not show a booming economy," said state economist Pearl Imada Iboshi of the inflation figures, which were released this morning by the U.S. Department of Labor's Bureau of Labor Statistics. "It's good for consumer prices, but it shows relatively weak (consumer) demand."

Prices rose 1.3 percent in Honolulu from the first half of 2000 to the first half of this year, the labor department said.

That compares with a national inflation figure for the same period of 3.4 percent.

However, consumer prices nationally in July registered the biggest decline in 15 years, dropping 0.3 percent for the month, the Labor Department said today. The decline was due in large part to the sharp drop in the cost of gasoline and other energy products.

Local economists said they had been expecting a higher number for Honolulu's inflation rate. In particular, Imada Iboshi said, the cost of rental housing locally has been increasing, but that was not reflected in the labor department's data, which showed an increase in residential rents of just 0.3 percent in the first half of the year.

Nancy Treadwell, regional economist with the Bureau of Labor Statistics in San Francisco, described Honolulu's latest inflation figure as "a mild increase."

Higher prices in transportation and food and beverage "dominated the rise in overall prices for the first half of 2001," she said.

Grocery prices in Honolulu rose by 4.3 percent in the first half of this year, the largest percentage gain among all the categories the labor department tracks locally, she said.

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said the latest Honolulu inflation rate was lower than he anticipated.

"It's a little surprising," he said. "It's consistent with some of the slowing growth in tourism, the slowing growth in the job counts, and sort of the waning effect of higher oil prices, and so that all makes sense. But what surprises me is that we're still not seeing what has to be the rising costs of rents."