Outsized declines in food and gasoline prices helped push consumer inflation in the Denver-Aurora-Lakewood area below 3% for the first time in three years, according to a bimonthly update from the U.S. Bureau of Labor Statistics.
The Consumer Price Index for metro Denver advanced 2.8% over the past 12 months, down from an annual rate of 3.5% in January. Nationally, the CPI-U rose to a 3.5% annual rate, compared to a 3.2% rate in February and a 3.1% rate in January.
The latest numbers reverse a 14-month streak where Denver’s inflation rate ran ahead of the U.S. rate, often by a wide margin. As recently as September, Denver consumers were coping with a 5.4% inflation rate vs. a 3.7% rate nationally.
So where did Denver prices change the most to flip the gap?
Gasoline prices dropped 20.6% compared to a year ago in Denver, while they rose 1.3% nationally. And no, Gov. Jared Polis didn’t find a hidden stash of refined petroleum nor did consumers trade in their big SUVs for Teslas en masse.
Here’s a better explanation. A severe cold snap in late 2022 knocked production offline at the Suncor Refinery in Commerce City, causing a 51% price spike in gasoline in the first two months of last year, according to a brief from the Energy Information Administration.
Nationwide, gasoline prices rose 9% in December and February. The big annual drop in gasoline prices in Denver reflects an elevated starting point. Once production at the state’s only petroleum refinery returned to normal, prices started to fall as more expensive gasoline imports were reduced.
Although not as extreme, grocery store prices also provided Denver consumers more relief. The cost of food purchased for home consumption fell 1.3% over the past year, aided by a 3.3% decline in local meat, poultry, fish and egg prices; a 3.1% decline in dairy prices, and a 3.5% decline in nonalcoholic beverages, according to the BLS.
Price gains were flat or close to it for cereals and bakery products; fruits and vegetables and other food items. Nationally, annual inflation for the cost of food eaten at home was 1.2%.
Eating out was a different story. Restaurants and other food providers charged 7.6% more than they did a year ago in metro Denver, significantly outstripping the 4.2% increase measured nationally, even with more favorable food inflation in the state.
Over the past two months, the index for energy prices was up 7.1%, while the food index was up 0.6% in metro Denver, so the relief in those two areas might not be long-lived.
Housing costs were up 4.9% the past year in Denver, ahead of the 4.7% gain nationally. But they fell 0.03% year-to-date compared to a 0.8% gain in the U.S.
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