Thank you Biden and Newsom—In four years’ inflation has gone up 20% in California.
“Prices have risen about 20% overall since 2020, according to an analysis by the California Legislative Analyst’s Office based on the most recent consumer price index data. Over the past couple of months, prices in California appear to have risen slightly more than the country as a whole, according to data from the Bureau of Labor Statistics.
Continued rising prices are why many Californians are struggling in an economy that’s widely considered to be doing OK because the nation has avoided a recession, experts say.
While a slowdown in inflation, or price growth, is “great news, it’s not like those prices are declining,” said Sarah Bohn, economist and director of the Public Policy Institute of California Economic Policy Center. “When you go to the grocery store, your total bill is still much higher overall than a few years ago,” she said.”
Don’t blame it on COVID—blame it on the Democrats. Look at your food, housing and gas prices—they are responsible.
Inflation slows, but Californians are still paying 20% more for stuff than before Covid
By Levi Sumagaysay, CalMatters, 3/6/24 https://sfstandard.com/2024/03/06/california-inflation-food-rent-insurance/
Pandemic-era inflation has fallen in California from its peak two years ago, but the costs of many goods and services continue to rise and are still higher than before the onset of Covid, a couple of closely watched economic indicators show.
Prices have risen about 20% overall since 2020, according to an analysis by the California Legislative Analyst’s Office based on the most recent consumer price index data. Over the past couple of months, prices in California appear to have risen slightly more than the country as a whole, according to data from the Bureau of Labor Statistics.
Continued rising prices are why many Californians are struggling in an economy that’s widely considered to be doing OK because the nation has avoided a recession, experts say.
While a slowdown in inflation, or price growth, is “great news, it’s not like those prices are declining,” said Sarah Bohn, economist and director of the Public Policy Institute of California Economic Policy Center. “When you go to the grocery store, your total bill is still much higher overall than a few years ago,” she said.
What’s more, Bohn said Californians’ wages have not kept up with inflation. “Wages only grew 15% than before the pandemic,” she said. “On paper, that looks amazing, like a $5-an-hour increase. But after inflation, it feels like a pay cut. I calculated that it’s like a $1.25-an-hour cut.”
That’s a big concern, especially for low- and middle-income families who “have a lot less flexibility in terms of what they’re spending their resources on,” Bohn said.
Nationwide, services are mostly responsible for continued inflation, Bureau of Labor Statistics data shows. The prices of goods such as new vehicles, and meat, poultry, eggs and fish were unchanged from December to January, while overall food prices were up about 0.4%, slightly less than the previous two months. Consumer costs for services such as electricity, rent, medical care, airfares and health and auto insurance all rose.
But in California, high prices for both goods and services persist.
Food banks see high demand
Food banks say the cost of buying food hasn’t gone down—and the demand for their services remains high as pandemic aid has expired and inflation remains.
While the San Francisco-Marin Food Bank hasn’t seen major price increases for meat, and produce prices have stabilized, it continues to see high prices for some food, said spokesperson Keely Hopkins. The average price the food bank has paid for eggs has risen by $2.27 a dozen over the past eight months, Hopkins said.
High food prices have also been a problem for the Los Angeles Regional Food Bank, which buys 10% of its inventory to supplement donated food: The food bank now serves an average of 900,000 people per month, two and a half times the monthly average pre-pandemic.
“(That’s) the impact of the end of Covid-era programs such as the SNAP/CalFresh benefit boost and the continued impact of inflation,” said David May, a spokesperson for the food bank.
On the services side, some California residents are struggling to get affordable auto insurance, with premiums rising 17.7% from 2023 to 2024, according to Bankrate.com. Prices for electricity have also increased, as regulators approve rate hikes by major utilities such as PG&E.
As for rent, “shelter is the major driver of services inflation in the inflation numbers,” said Jerry Nickelsburg, senior economist for the University of California Los Angeles Anderson Forecast. He added that “we are seeing a slowing in rental rates (negative in some parts of the state), but as leases come due and rent-stabilized units are vacated, average rents increase to today’s market rents.”
Rent in California is 38% higher than the national median, according to real-estate listings company Zillow. This month, the median rent of $2,755 in the state rose $5 from the month before but is $195 less than it was in March 2023, Zillow data shows.
Meanwhile, the personal consumption expenditures price index, which excludes food and energy costs, rose 0.4% in January from the previous month and 2.8% from the previous year, according to data released by the Commerce Department’s Bureau of Economic Analysis last week.
The Federal Reserve is said to focus more on this index instead of the consumer price index because it more accurately reflects actual consumer spending. Either way, since the Fed’s target inflation rate is 2%, continued inflation means that it is not likely to slash interest rates anytime soon—meaning possible continued slowness in homebuying and in getting loans to buy big-ticket items such as cars, and in borrowing by businesses.
Nickelsburg said he does not expect the Fed to reduce interest rates in the first half of the year. That’s in line with the expectations of other economists, such as those from Wells Fargo, who said in a report last month that continued inflation means the “road back to 2% inflation likely will have some potholes.”
