Southern California inflation heats up in early 2024

If you’re rooting for a chill in the swiftly growing local cost of living, 2024 offers little hope, so far.

Southern California inflation was rising at a 4% annual pace in March – a decided upswing from price gains of 3.1% in January, says my trusty spreadsheet’s average of Consumer Price Indexes for Los Angeles-Orange County (monthly data) and the Inland Empire and San Diego (bi-monthly reports for March).

Topline

Ponder that this yardstick of local inflation rose 4.4% for all of 2023 – so we’ve made little progress this year. Also note, this isn’t 2022 when inflation soared by 7.9%. Things are better than that worst-in-four-decades scenario.

Plus, this is no Southern California quirk. Nationally, inflation ran at a 3.5% annual rate in March vs. gains of 3.1% in January, 4.1% for all of last year, and 8% in 2022.

Now looking across Southern California, 2024’s big inflationary headache is about “services” – what you pay the people who do stuff for you. And fatter paychecks are one reason why costs are rising.

For example, look at the CPI’s “services less rent” category for the region. These prices are up 5.4% in the year ended in March – a huge reversal from the gain of only 0.3% in January. This cost niche rose 5.2% last year and 7.5% in 2022.

The good news in the CPI report is that prices for the goods that we purchase appear relatively tame overall.

Prices of what we frequently use – “nondurable” items such as fuel and food – were up 2.1% in March vs. 2.6% in January and 1.6% last year. That’s far less than the 12% jump of 2022.

And prices for big-ticket durable items – think autos, furniture and appliances – continue to decline. They’re down 2.8% in the year ended in March after dropping at a 1.9% annual rate in January and falling 1.7% last year. But don’t forget, these costs jumped 7.2% in 2022.

Tidbits

Let’s look at how Southern California prices are moving in certain key slices of the CPI, ranked by the past year’s inflationary moves …

Dining out: Up 6.5% in the 12 months ended in March vs. gains of 5.4% in January, 5.1% for all of last year, and 5.9% in 2022.

Housing: Up 5.1% in March vs. gains of 3.6% in January, 7.4% last year, and 6.8% in 2022.

Medical care: Up 4.1% in March vs. gains of 1.3% in January, 2.7% last year, and 5.2% in 2022.

Electricity: Up 2.5% in March vs. off 1.6% in January, up 12.5% last year, and up 16.3% in 2022.

Recreation: Up 2.3% in March vs. gains of 2.7% in January, 4.3% last year, and 6.4% in 2022.

Groceries: Up 1.4% in March vs. gains of 2% in January, 4.3% last year, 11% in 2022.

Gasoline: Up 1.4% in March vs. up 2.2% in January, off 8.5% last year, and up 32% in 2022.

Apparel: Off 0.5% in March vs. up 1% in January, up 3.3% last year, and up 5.9% in 2022.

Vehicles, new and used: Off 2.9% in March, 2.8% in January, 0.1% last year – but up 11% in 2022.

Bottom line

Consider an odd number that the Federal Reserve and many economists track carefully – inflation minus food and energy. (Yes, how does one survive without that?) And remember, the Fed’s inflation target is 2%!

This Southern California cost-of-living benchmark was rising at a 4.3% annual pace in March compared with gains of 4.4% in January, 5.1% last year, and 6.1% in 2022.

You don’t need a business degree to see there’s little cost relief.

Post script

Note that local wages for all workers rose 5% last year, according to Southern California’s Employment Cost Index. That’s after gaining 5.8% in 2023 and 5.6% in 2022.

Starting in April, state law says means many fast-food operators must pay at least $20-an-hour. How that impacts inflation – overall or for food – remains to be seen.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Source: Orange County Register