Metro Denver inflation rate continues climbing in 2017, hitting highest level since 2011
Higher gasoline prices in the first half of the year, along with another big gain in housing costs, helped push up inflation in metro Denver to its highest rate since 2011.
The Denver-Boulder-Greeley consumer price index rose at a 3.1 percent annual pace in the first six months of 2017, driven higher by a 5.3 percent gain in shelter costs and a 16 percent jump in gasoline prices, according to the U.S. Bureau of Labor Statistics.
The last time local inflation ran hotter than now was in the first half of 2011, when prices rose 3.8 percent. Last year, consumer prices locally, which are reported twice a year, were up 2.8 percent.
Rents rose 4.9 percent in the first half of the year from the first half of 2016 and an equivalent measure for the cost of owning a home was up 5.7 percent. Utilities also cost more, with electricity up 6.6 percent and natural gas for heating up 9.3 percent.
Housing inflation, however, showed signs of easing. The 5.3 percent jump in shelter costs in the Denver region is actually down from a 7.6 percent gain in the first half of 2016. That should have put downward pressure on the overall inflation rate, but gasoline prices, which had moved lower from 2013 to 2016, surged 16 percent in the first half.
A drop in oil prices this year could make that increase short-lived. Prices at the pump for gasoline in metro Denver this month are already heading back to levels seen last summer, according to GasBuddy. That could neutralize the impact of gasoline prices on inflation in the second half of the year.
Food prices were up 2.1 percent, with restaurant costs rising 4.6 percent, while the cost of food at home rose at 0.2 percent. Colorado voters last fall passed a minimum wage increase to $12 an hour by 2020.
Supporters argued that higher living costs made the wage increases necessary, but the Colorado Restaurant Association countered the increases would push up the cost of eating out.
Apparel costs dropped 6.8 percent in the first half of the year, their biggest drop since the second half of 2007. Medical care costs were up 1.9 percent.
The Denver-Boulder-Greeley CPI number is the only inflation figure released by the U.S. Bureau of Labor Statistics for Colorado. It is a closely watched measure that plugs into formulas used to determine limits on government spending in Colorado and the pay increases that workers receive. The Colorado Legislative Council is predicting the local consumer inflation rate will end 2017 at 2.9 percent.
A wage increase survey from the Mountain States Employers Council found that Colorado employers were planning average wage hikes of 3.1 percent next year, the biggest increase since 2008. Assuming last year’s inflation rate of 2.6 percent had held, the increase would have given consumers one of the best chances to get ahead of inflation in years, but it appears that won’t be the case.
Consumer prices nationally rose 2.2 percent in the first half of the year, with shelter costs up 3.4 percent nationally, according to the U.S. Bureau of Labor Statistics.