Consumer inflation in metro Denver rose last month at its fastest pace in 12 years, according to the latest Denver-Aurora-Lakewood Consumer Price Index from the U.S. Bureau of Labor Statistics
The region’s annual inflation rate surged to 3.8% in January, up from a 2.6% pace last year and a 2.3% pace in 2018 and above the 2.5% pace measured nationally in January.
The last time inflation ran hotter in metro Denver was 2008, when it rose 4.1%, and 2017 came close at 3.7%. But Kate Watkins, chief economist at the Colorado Legislative Council, warned against reading too much into a single report.
“The data of individual metropolitan statistical areas are quite noisy and the Denver-Aurora-Lakewood January numbers show significant fluctuations in several components that aren’t likely to hold in future months,” she said.
So what drove the increases? Gasoline costs were up 20.6% in January year-over-year, contributing to a 5.5% gain in transportation costs.
Although prices at the pump are coming down fast this year as the coronavirus reduces oil demand worldwide, a gallon of regular unleaded averaged $1.92 a gallon a year ago in metro Denver and is running $2.39 a gallon, according to the AAA Gas Prices survey.
Food costs overall were up 3.1% with the cost of eating at home up 1.7% and the cost of eating out up 4.7%. The cost of alcoholic beverages fell 1.1%, while the cost of nonalcoholic beverages rose 13.8% on the year in January.
Core inflation, which excludes more volatile energy and food costs, rose at an annual pace of 3.6% in January in metro Denver.
Housing costs were up 4.1%, with rents up 3.5% and the equivalent cost of owning a home up 4.5%. Household energy costs fell 3%, driven by flattish electricity prices and lower natural gas heating costs.