After reaching its fastest rate in a decade last year, inflation in metro Denver has calmed down significantly, thanks in part to more moderate gains in housing and medical costs.
A new consumer price index from the U.S. Bureau of Labor Statistics shows consumer prices in metro Denver rose at a 2 percent annual rate in November. That contrasts with a 3.7 percent consumer inflation rate in the second half of 2017 and a 3.2 percent pace in the first half of 2018.
Core inflation, which excludes more volatile food and energy items, rose 1.8 percent in November versus a 3.1 percent pace in 2017.
“Inflation in Colorado has outpaced the nation for the past five years. However, inflation slowed in 2018,” said Brian Lewandowski, associate director of the business research division at the University of Colorado Boulder’s Leeds School of Business.
The U.S. CPI rose 2.2 percent in November, above the rate seen in metro Denver.
Inflation is a closely watched measure in Colorado. It plugs into the equations that state and local governments use to determine spending increases under the Taxpayer Bill of Rights. Employers also track it to determine pay raises for the coming year.
The Office of State Planning and Budgeting has forecast gains in the local CPI of 2.7 percent this year and 2.5 percent next year.
Last year, the Bureau of Labor and Statistics said it would make significant changes to its Denver-Boulder-Greeley Consumer Price Index. Boulder and Greeley were dropped and the publication frequency went from twice a year to six times a year under the rebranded Denver-Aurora-Lakewood Consumer Price Index.
The report went dark this year until numbers were recently released for November, the first month where year-over-year comparisons were made available.
Price changes for some individual items, such as gasoline, still aren’t available. But most categories are.
Medical inflation is running 3.1 percent a year versus 4.4 percent last year. Housing costs were up 1.9 percent in November, a significant improvement from the 4.8 percent gain last year and the 5.9 percent gain in 2016. Rising home prices and rents were a big reason why inflation in metro Denver has outpaced the rest of the country for most of this decade.
Food and beverage costs rose 1.9 percent in November, down from the 2.6 percent pace last year. Fruit and vegetable costs were down 6.8 percent, but that was offset by a 2.8 percent increase in meat prices and a 3.5 percent jump in the price of alcohol. The cost of eating out was up 3.4 percent, which is below the 4.8 percent rate of inflation measured last year.
The biggest drop reported came in clothing costs, which fell a sharp 13.4 percent in November versus the same month a year ago.
Prices continue to rise at a rapid clip in a few areas, chief among them private transportation, up 5.4 percent versus a 4 percent rate last year. A big contributor is auto insurance, with costs shooting up 10.9 percent in November. A rate of increase for last year was not available.
Insurance industry sources attribute the premium increases to large claims from hail storms, more uninsured motorists, and the increasingly expensive technology included in automobiles.
The index shows that new car prices fell 2.7 percent, while used car prices rose 3.9 percent.
The November numbers don’t include a breakout for gasoline costs, which were rising at a 14.4 percent pace in the first half of this year, but are now falling sharply. Declining fuel costs should put downward pressure on future CPI reports.