Consumer inflation in metro Denver dropped below 2% in July, entering the Federal Reserve’s comfort zone for the first time since March 2021.
Prices for a basket of consumer goods and services in the Denver-Aurora-Lakewood area rose 1.9% between July 2023 and July 2024, compared to a 2.6% annual gain in May and a 2.8% gain in March, according to an update Wednesday from the U.S. Bureau of Labor Statistics.
Metro Denver’s Consumer Price Index gain is a full percentage point below the 2.9% annual rate measured nationally in July. But in a worrisome sign, prices shot up 0.62% between May and July, nearly four times the 0.15% gain measured nationally.
“In many ways, July’s result was the most ‘normal’ inflation reading we have seen since the pandemic began, and could have easily been produced in 2019,” said Douglas Porter, chief economist with BMO, in a commentary.
Falling gasoline prices, down 12.1% on the year, used car prices, down 9.7%, and apparel costs, down 4.5%, put downward pressure on inflation in metro Denver. Grocery store prices were flat, with decreases in cereals, baked goods, vegetables and fruits, offsetting gains in dairy products and meat.
Despite that, the cost of eating out rose 5.7%, reflecting higher labor and lease expenses at restaurants. Shelter costs also continue to outpace overall inflation, rising 3% the past year and 1.2% in the past two months. The flare-up in rents, if sustained, could fuel inflation in the months ahead given the heavy weight shelter costs hold in the index.
Inflation on the whole, however, is moderating enough to provide the Federal Reserve maneuvering room to declare victory and start cutting rates, said Selma Hepp, chief economist with CoreLogic, in emailed comments.
“This means for the average American that the Fed will likely cut interest rates next month, which will slightly bring down the cost of borrowing – a good step for auto and home sales, in particular,” Hepp said.
Even though the pace of inflation is moderating, its impacts are here to stay. Colorado consumers have seen prices rise 20% since 2020, resulting in the typical household spending $34,194 more cumulatively since 2020, according to estimates from the Common Sense Institute.
Originally Published: August 15, 2024 at 1:20 p.m.
