Honolulu residents saw a bigger increase in inflation last year than the national average, led by hikes in housing and grocery prices.

The Honolulu consumer price index rose 4.8 percent in 2007 and compared with a 2.8 percent gain nationally, said the U.S. Bureau of Labor Statistics.

Inflation in Honolulu has risen by about 11 percent over the past two years, marking the greatest increase since the early 1990s.

"We had been in such a long period in the 1990s of slow growth and slow inflation," said Pearl Imada Iboshi, state economist. "The very strong growth in the last few years has made an impact on inflation, especially in the area of housing."

Last year's inflation rate was down from 5.9 percent in 2006, which was the highest in 15 years. Last year was the second-highest in that period.

"Overall we were expecting rates to come down from the highs of '06," said Iboshi. "We expect this will continue to come down a bit more as the housing component continues to ease."

The consumer price index is made up of about 200 items ranging from breakfast cereal to pet services and shoes. The housing component — a category that includes payments for rent, furniture, household utilities and other household expenses — is the biggest single category, accounting for about 42 percent of the index.

Honolulu's housing component was the big factor in the latest inflation increase, as it was in 2006. In 2007 the housing component jumped 7.2 percent, fueled in part by the rental market. The consumer price index tracks changes in rent, including what it would cost if a homeowner was to rent his or her residence.

Those prices have gone up in recent years along with Honolulu's median single family home resale costs. The median price jumped to $643,500 last year from $299,900 in 2001, according to Honolulu Board of Realtors data.

"We're still seeing the pass through of the higher home prices," said University of Hawai'i economics professor Carl Bonham. "Our overall cycle for the economy tends to go along with the housing cycle."

Grocery costs increased by 6.1 percent on Oahu, or faster than the costs of eating out, which were up 4.9 percent.

Bonham said some of the grocery increase may be linked to rising fuel costs because of machinery used in producing and transporting food. But he said a bigger factor was a growing demand for ethanol forcing up prices for corn and other crops used in producing the fuel.

Other notable changes contributing to the 2007 Honolulu consumer price index were: