Even as inflation nationwide slowed in February, higher costs to gas up your car, heal your body and bed down for the night are siphoning...
Even as inflation nationwide slowed in February, higher costs to gas up your car, heal your body and bed down for the night are siphoning more cash out of the wallets of Puget Sound-area residents.
Federal data released Friday showed that inflation in the Seattle-Tacoma-Bremerton area was up 1.3 percent from the last reading in December. Between February 2007 and February 2008, local inflation climbed 4.73 percent — the highest rate since August 2006. The comparable U.S. figure was 4.03 percent.
The news comes as no surprise to area residents, such as Joseph Mascorella. He moved from Seattle to Kenmore after the old house he lived in was torn down to make way for condos, and “I couldn’t afford $900 to $1,200 for a studio in the Cascade neighborhood.”
Now, rising gas prices — up a whopping 26.9 percent vs. last year — have Mascorella taking the bus and walking as much as possible. “I put $10 in a friend’s car last week in Kenmore, went to the airport and downtown, and at the end of that run I was on empty,” he said.
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The local figures stand in contrast to a relatively mild national inflation report, underscoring that whatever the big-picture numbers are, one’s experience of the “real economy” depends very much on circumstances and geography.
The Bureau of Labor Statistics said U.S. consumer prices were unchanged last month, better than the expected 0.3 percent rise, thanks to energy and food costs’ moderating. Core inflation, which excludes the often-volatile energy and food categories, also held steady in February after a worrisome 0.3 percent jump in January. (In Seattle, core inflation came in at 3.8 percent year over year.)
But the relief was expected to be short-lived, given that energy prices have resumed their upward climb since the February data were collected. Crude oil hit a record high this week above $110 per barrel, and gasoline-pump prices jumped to a national record of $3.28. (In Seattle, the average price for regular unleaded this week was $3.475, among the highest in the country, according to the federal Energy Information Administration.)
Nationally in February, energy prices posted a 0.5 percent decline. Gasoline prices fell by 2 percent, the biggest drop since last August. In the Seattle area, however, gasoline prices rose 2.7 percent in February.
Fuel-price rises contributed to an overall 7.4 percent increase in local transportation costs over the past 12 months.
Housing also key factor
And despite the slowdown in the Puget Sound-area real-estate market, shelter costs were up 0.5 percent since January and 6.1 percent over the past year, because of higher home prices and, especially, higher rents. (In bureau-speak, “shelter” excludes the cost of heating and furnishing a home.)
“Washington state has the lowest rental-vacancy rate in the country,” said Bret Bertolin, senior economic forecaster for the state Economic and Revenue Forecast Council.
Rising rents, Bertolin said, were a big reason that local inflation came in two-tenths of a percentage point higher than what he had predicted.
Grocery prices in the Seattle area dropped 1.1 percent in February, dovetailing with a national easing of food costs. Those rose by 0.4 percent last month, after a 0.7 percent jump in January.
Nationally, the price of vegetables, fruit, poultry and pork declined. But the price of cereal and bakery products shot up by 1.8 percent, the largest monthly increase since January 1975. The higher costs partly reflect higher energy prices, which raise transportation costs. Also, food prices have come under pressure because of the increased demand for corn in ethanol production.
The cost of medical care locally rose 6.5 percent between February and a year ago. Clothing prices rose 5.1 percent over the same period.
Electricity prices in the Puget Sound region were 7.1 percent higher year over year. Residential natural-gas service, however, was 11.9 percent cheaper, and the cost of household furnishings and operations fell 5.4 percent.
In general, Bertolin said, it’s to be expected that local inflation would outpace the nation’s, given the relative strength of the local economy at a time when the U.S. as a whole is flirting with recession.
The official state economic forecast, prepared last month, predicts Seattle-area inflation will slow its rate of increase considerably later this year, averaging 3.4 percent vs. the 3.9 percent average for 2007.
Nationally, the core rate was flat for February, leaving the underlying inflation rising by 2.3 percent over the past 12 months. That still is above the Federal Reserve Board’s comfort range of 1 percent to 2 percent.
But February’s relatively good reading should bolster the view that the central bank will move aggressively to cut interest rates Tuesday to battle spreading economic weakness.
Many private analysts think the Fed will cut rates by as much as one-half to three-fourths of a percentage point, seeking to either prevent a full-blown recession or at least moderate its effects.
Last year’s big jump in consumer prices — 4.1 percent nationally, the biggest increase in 17 years — has raised concerns about stagflation, the malady that beset the economy in the 1970s when economic growth stagnated at the same time prices skyrocketed.
Federal Reserve Chairman Ben Bernanke, however, has said he doesn’t think the country is at risk of another bout of stagflation.
The rising cost of the Seattle lifestyle has Doug Petersen — who pays $400 a month for a room in a group house — thinking of making a change.
Hanging out in South Lake Union’s Kapow! coffee shop Friday afternoon, Petersen said: “I wonder if I should go live in Fiji and let the Joneses pass me by.”
Seattle Times business reporter Melissa Allison and The Associated Press contributed to this report
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org