Consumer prices in metro Denver in July rose at triple the U.S. rate, with gasoline, auto insurance, clothing and meat prices outpacing the gains measured nationally, according to the latest inflation report from the U.S. Bureau of Labor Statistics.
The Consumer Price Index for All Urban Consumers in Denver-Aurora-Lakewood shot up 1.6% for the two months ending in July. Measured over the past 12 months, from July to July, metro Denver’s annual consumer inflation rate is up 3.1% versus a 1%increase nationally.
Driving metro Denver’s outsized inflation rate this summer are above-average gains in the price indices for gasoline, auto insurance, clothing, furniture, meat and poultry, and dining out.
After cratering in the first four months of the year because of a supply glut and reduced demand, gasoline prices have rebounded sharply this summer. They remain down 20.3% nationally compared to July 2019. But in metro Denver, they are only 3.1% below year-ago levels.
Auto insurance customers in Colorado also aren’t getting as good a break on premiums. Auto insurance costs are down 1.9% in the U.S. over the past year, reflecting fewer accident claims as people drive fewer miles because of the pandemic. In metro Denver, auto insurance costs are up 11.8% year over year, even after accounting for the rebates insurers have passed on, according to the BLS.
There are other categories where metro Denver consumers are paying up. Clothing costs are up 2.4% locally, but down 6.5% nationally. And all the cattle raised in the state haven’t kept local protein prices in check. The Denver price index for meat, poultry, fish and eggs is up 14.4% over the past year compared to an 8.4% gain for the U.S. index.
Denver-area consumers are getting a better than average price break in some categories, including fruits and vegetables, cereals and baked goods, electricity, medical costs and alcohol.
Time will tell if Denver’s higher inflation rate is an anomaly or a harbinger. Dean Baker, a senior economist with the Center for Economic and Policy Research, cautioned against reading too much into the larger than expected spike in consumer prices last month.
“We may see another month or two of high inflation, but there is little reason to believe that this is the start of an upward spiral,” he said in an analysis of the July CPI numbers. “It is overwhelmingly attributable to reversals of sharp price declines during the shutdown period. In addition, there are sectors that are experiencing one-time and temporary cost pressures as a result of adjustments necessary to cope with the pandemic.”
Baker argues the ghosts of the inflationary 1970s probably aren’t coming back to haunt U.S. consumers. But if they do, Denver residents could be the first to get spooked.
