Inflation puts a permanent strain on Southern California household budgets – Orange County Register
“Survey Says” looks at various rankings and scorecards that assess geographic locations and finds that these grades are best viewed as a mix of artistic interpretation and data.
Buzz: The cost of living in Los Angeles and Orange counties has increased by 15% in three years. In the Inland Empire it is up 19%. These are pretty much enduring hits on a family’s budget.
Source: My trusty spreadsheet looked at the January CPIs for Southern California, released Tuesday, February 14, and how the cost of living has skyrocketed since January 2020, just before the coronavirus turned the economy upside down.
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The short-term direction of inflation is mixed. January’s CPI shows LA OC prices up 5.8% in one year — and a surprise 4.9% gain in December. But the Inland Empire inflation rate of 7.3% was the lowest since September 2021.
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However, ignore recent trends and intense debate over the Federal Reserve’s efforts to cool an overheated economy. No amount of cooling will erase the blow of the pandemic era from a household’s checkbook.
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Consider three years of inflation in the price of everyday items in Southern California.
Food and drinks: 19% up in LA-OC and 23% up in the Inland Empire. Food bills soared as farmers and truckers faced labor shortages and drought shrunk harvests. And eating out offers no savings.
Housing: 15% up in LA-OC and 22% up in the Inland Empire. Building a roof over your head is far more expensive due to the pandemic-era rush for larger living spaces and skyrocketing utility bills.
Clothing: 5% up in LA-OC and 22% up in the Inland Empire. Consumers first bought comfortable clothes when work and study headed home, and then went on a second shopping spree for new wardrobes when workers returned to the office and students returned to the classrooms.
Transport: 19% up in LA-OC and 22% up in the Inland Empire. Rising fuel prices made driving and flying much more expensive. And the shortage of spare parts made it difficult to find new cars, causing used car prices to skyrocket.
Medical supplies: 12% up in LA-OC and 14% up in the Inland Empire. The labor shortage drove up wages. Prescriptions continued their longstanding price hikes.
Recreation: 12% more in LA-OC and 10% more in the Inland Empire. A little good news: televisions have become cheaper. Everything else that’s fun—from pets to theaters to museums—became more expensive.
Other goods and services: 12% up in LA-OC and 12% up in the Inland Empire. Personal services – from haircuts to banking to funerals – have been bloated due to a limited workforce. Health and beauty products, tobacco and stationery are only moderately more expensive.
Education and Communication: Perhaps the only good inflation news. Costs are only up 4% in LA-OC and 6% in the Inland Empire. People have postponed supplementary education, so tuition has stabilized. And a glut of mobile phones lowered prices.
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The Inland Empire is one of the country’s hottest job markets in the pandemic era — and that’s why inflation is running hotter in Riverside and San Bernardino counties.
Wages in Southern California are also rising — up 17% in three years, up from 11% in 2017-2019 before the pandemic, according to the federal labor cost index.
Yes, inflation has eaten up most, if not all, of the wage gains. On the other hand, plentiful jobs and higher wages also fuel inflation – both as a cost to sellers of goods and services and as a means of payment for buyers.
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Where should inflation support come from? Look at three “Big Picture” slices of the CPI.
The greatest hope is in the so-called “durables” – the coveted goods such as furniture, household appliances and vehicles. That cost is up 13% in LA-OC and 16% in the Inland Empire since 2020.
But the supply chain challenges that drove those prices up have largely been resolved. Consider the recent fall in used car prices as the supply of new cars improves.
The prospects for non-durable goods – the things that people buy and consume frequently – are bleaker. That spending — up 17% in LA-OC and 21% in the Inland Empire since 2020 — is mostly necessities.
Ups and downs will be seen in unit prices – think petrol or eggs – but it will take a much slower economy to find meaningful bargains.
And then there are services, which are up 14% in three years in LA-OC versus 19% in the Inland Empire. As they are heavily people-driven and staffing remains a problem, rising wages will weigh on services inflation for the foreseeable future.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
https://www.ocregister.com/2023/02/14/inflation-permanently-scars-southern-california-household-budgets/ Inflation puts a permanent strain on Southern California household budgets – Orange County Register
