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The Honolulu Advertiser
Posted on: Thursday, February 23, 2006

Islanders learn to deal with rising costs

By Sean Hao
Advertiser Staff Writer

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Rising housing and gasoline prices helped push the cost of living on O'ahu up 3.8 percent last year, the fastest increase since 1992.

The robust economy is generating jobs and higher incomes, and that helps take some of the sting out of higher prices.

But for those on fixed incomes, such as Theresa Canlas, a retiree in Makiki, rising costs mean cutting back. Canlas is riding TheBus more and eating at home.

"I learned how to deal with it over the years," she said. "The food is expensive, as is anything to do with the car. Ninety-nine point nine percent of meals I make at home."

Inflation pressures won't disappear anytime soon, according to economists. The cost of living this year is forecast to rise between 3.3 percent and 4 percent.

"We're expecting it to be about the same this year and hopefully to start slowing after that," said state economist Pearl Imada Iboshi.

O'ahu's energy prices rose 16 percent year over year, largely because of higher oil prices. A rapid rise in land prices helped push housing costs meaning rent and mortgage expenses up 5.6 percent last year.

While prices are going up faster, incomes are climbing at an even quicker pace. Personal incomes rose by about 3.5 percent in 2005 after adjusting for inflation, according to economists.

"On average as a state we're doing well," said Carl Bonham, an economist at the University of Hawai'i-Manoa. "Some sectors are doing very well," he added, referring to hot spots in the economy such as construction jobs.

Still "there are some people feeling some bite in their spending ability," Bonham said. "For some people like myself ... who are getting 1 1/2- to 2 1/2- to 2-percent pay raises, we're losing out. Our expenses are definitely rising faster than our income."

Honolulu's 3.8 percent rise in prices last year compares with a 3.4 percent increase nationwide.

For business owners, the pressure is building to raise prices.

Talitha Chavis-Clore, the owner of the Chavis-Clore Cleaning Service, is planning to boost her fees on June 1 in response to recent increased costs for such things as cleaning supplies and her company's Internet provider account.

She also increased salaries for her 16 workers from $14 an hour to $15 an hour two weeks ago, a step she saw as necessary as Hawai'i continues to enjoy the lowest unemployment rate in the country.

"I'm trying to stay competitive," Chavis-Clore said, "but it's hard."

Gordon Links, a retiree in 'Ewa Beach, said he's noticed increases in taxes, food, medical costs and shipping services. Links said his Social Security benefits have increased by about 4 percent. But costs such as property taxes are rising faster.

"Everywhere you go, you see a rise," Links said. "It makes it very difficult when you're retired."

Advertiser staff writer Dan Nakaso contributed to this report.

Reach Sean Hao at shao@honoluluadvertiser.com.