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The Honolulu Advertiser
Posted on: Friday, August 15, 2008

Hawaii prices up 4.9% this year

By Greg Wiles
Advertiser Staff Writer

A BREAKDOWN

Percent change first half 2008 vs. first half 2007:

All items: 4.9%

Food at home: 6.1%

Shelter: 3.6%

Rent: 4.8%

Electricity: 43.5%

Gasoline: 21.8%

Apparel: 3.2%

Recreation: 3.5%

Education, communication: 2.0%

Source: U.S. Bureau of Labor Statistics

1st-half figures

January-to-June inflation over the past decade:

2008: 4.9%

2007: 5.0

2006: 5.8

2005: 3.1

2004: 3.3

2003: 1.6

2002: 1.1

2001: 0.8

2000: 1.9

1999: 0.4

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A jump in electricity costs, along with surging gasoline prices and rising housing costs drove up inflation in Honolulu during the first half of the year, keeping prices here higher than in many Mainland cities.

Figures released yesterday show the consumer price index for Honolulu rose 4.9 percent in the January-to-June period as inflation continued to eat into residents' take-home pay. It was the third-highest increase for the period in the past decade.

The increase shouldn't come as much of a surprise to many people who've experienced sticker shock at gas pumps, as prices for a gallon of regular spilled above $4 and set records. Hawai'i's nation-leading electricity prices have gotten people's attention as well.

The latest figures from the U.S. Energy Information Administration show the statewide average at 29.92 cents per kilowatt hour in the month of March, or 39 percent more than a year earlier.

"I'm definitely 100 percent more aware of electricity and how much more it's costing," said Asia Porlas, 22.

She said the electricity bill for her Kane'ohe duplex has gone up by about $50 in the past six months, prompting her to turn off lights when not being used and avoid using the air conditioner.

"I've noticed a real steady incline (in prices)," she said.

Hawai'i's statewide average electricity costs are almost three times the national average because of local utilities' reliance on oil to generate most of their electricity. The statewide average for a gallon of gasoline was at $4.44 yesterday, or $1.189 more than a year earlier, and second highest in the nation after Alaska.

The inflation rate was higher than forecast by the Department of Business, Economic Development and Tourism and forced the agency to revise its estimate upward. Pearl Imada Iboshi, state economist, noted the unexpected spike in crude oil prices contributed to the rise in the consumer price index for Honolulu, along with housing prices that remained higher than most of the rest of the country.

She said she expects shelter costs to come down during the second half of the year, giving some respite to local consumers. She said the state is forecasting a decline in gasoline costs in coming months.

"We do expect it will be lower during the next half of the year," Iboshi said. "Basically, it's a continuation of the slowing increases in terms of housing and the easing off on the transportation (gasoline) side as well."

Honolulu tied with Pittsburgh for having the highest first-half increase in inflation of 13 cities, according to semi-annual consumer price index reports issued yesterday by the U.S. Bureau of Labor Statistics. The agency releases Honolulu inflation numbers twice a year.

Other cities ranged from a 2.2 percent increase in Cincinnati to a 4.6 percent rise in San Diego and Anchorage. Larger cities' inflation rates are reported on a monthly or bimonthly basis.

ENERGY DATA SURPRISING

Carl Bonham, executive director of the University of Hawai'i Economic Research Organization, said he wasn't aware of the factors that contributed to inflation in the dozen other cities, but suspected some of it dealt with how much people drove in those areas and the tumbling price of housing in some markets wracked by mortgage crisis woes.

The median price of an O'ahu single-family home fell 2.9 percent to $628,500 during the first six months of the year compared with the same period in 2007, according to an analysis by Prudential Locations LLC. That compares with markets where housing prices may be down by double-digit percentages, Bonham said.

"The energy numbers were a bit surprising," said Bonham, who had forecast lower energy costs. "Nobody thought oil was going to peak where it did."

The first-half increase also comes after two years in which inflation is up by more than 10 percent. That has people noticing and spending less on non-essential activities.

Porlas, who works as a supervisor at Tokoname, a Japanese restaurant in Kailua, said she's also seen other people cutting back as they try to meet higher everyday living expenses.

"Prices have gone up and people going out has gone down, myself included," Porlas said.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.