Consumer prices in the NY area increased more than expected in December
Power lines along Ruland Road in Melville. Home energy costs are on the upswing, according to the latest inflation report. Credit: Newsday/Steve Pfost
Consumer prices in the metropolitan area increased more than expected last month compared with December 2021, but the rise doesn’t mean another spate of high inflation is on the horizon, economists said.
The federal Bureau of Labor Statistics reported on Thursday its consumer price index for the 25-county region that includes Long Island climbed 6.3% in December compared with a year earlier. That year-over-year increase was larger than November’s 5.9% and the highest since August's 6.6%.
The price index rose last month in part because of the higher cost of home energy and transportation. Prices for natural gas and electricity climbed 23.2% and 15.7%, respectively, year over year. New automobiles were up 8.2%.
The cost of gasoline increased 0.5%, an improvement over the double-digit year-to-year spikes of last summer. Groceries were up 10.1%, which is in line with last fall’s rate of increase.
“Don’t press the panic button because I think inflation is continuing to decline gradually,” said John A. Rizzo, an economist and Stony Brook University professor.
He said the magnitude of last month’s increase in the price index was influenced by a decline in prices in December 2021 compared with November 2021. A review of monthly changes in the index shows consistent rises of 0.2% since July 2022, he said.
“This fits with the monthly changes that we saw in the pre-inflationary period” of 2019 and 2020, Rizzo added.
Locally, economists focus on year-over-year changes in the index because that eliminates seasonal factors, such as summer travel and holiday shopping.
In addition, December's rate of increase in the metro-area price index, compared to the previous 12 months, was nearly identical to the national rate of 6.5%. That’s a change from the first six months of 2022 when the national rate outpaced the metro rate by two percentage points or more.
The gap has narrowed because residential rents, primarily in New York City, have returned to their pre-pandemic pattern as landlords no longer feel the need to entice pandemic-fearful people to return to the city, according to Bruce Bergman, a regional economist in the labor bureau’s Manhattan office.
“We’ve had a noticeable pick-up in rent increases," he told Newsday, adding that the year-over-year number was 0.2% in December 2021 compared with 4.9% last month.
Bergman also said the metro area price index, excluding the volatile cost of food and energy, climbed 5.4%, year over year. That’s the biggest such increase since July 1991.
Companies are being battered by inflation, according to the leaders of business trade groups.
“Small business owners in our region are still on an inflation roller coaster and the high costs of goods continues to place significant pressures on their operations and finances,” said Matt Cohen, president and CEO of the Long Island Association business group.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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