May inflation figures for Houston area, nation

In Houston housing rose 4.8%

Wendy Natt, Jun 18, 09.

The cost of consumer goods and services nationwide dropped 1.3 percent from May 2008 to May 2009, the largest year to year decrease since April 1950, according to a recent report by the US Bureau of Labor Statistics. The figures come from the Consumer Price Index for All Urban Consumers (CPI-U), reported on in a recent Houston Economic Indicators email update from the Greater Houston Partnership (GHP).

The GHP update says that the drop is due mainly to a decrease in energy costs, and they point to the spike in energy prices that precipitated this:

At this time last year, oil and natural gas prices were rising toward record highs reached in mid-’08, from which they then fell substantially. Last month, the spot market price for oil was 53 percent below its May ’08 reading, and spot gas was off 66 percent. U.S. headline inflation should remain negative for a few more months as the CPI compares this year’s energy prices with last year’s far more elevated prices.

Areas where consumers did feel inflation include restaurant food prices, which rose 4.2 percent from May 2008 to May 2009 (compared to a 1.5 percent rise in food at home costs), education cost grew by 5.5 percent, and the cost of tobacco and other smoking products went up sharply, by 27.4 percent.

GHP notes that core inflation, which excludes all categories of good and services except the typically more volatile food and energy, was 1.8 percent for the past year. This figure falls “well within the 1- to 2-percent range the Federal Reserve Bank is reputed to consider acceptable,” according to GHP.

CPI data for Houston for odd-numbered months include only food at home, energy and shelter costs. GHP compares these to the national inflation figures, noting that while increases in food at home costs were relatively low, housing figures here grew at more than 3 times the national rate:

The cost of food at home in Harris and the seven adjoining counties rose 0.5 percent over the year—only a third of the nationwide increase. Shelter costs, however, grew 4.8 percent in Houston, more than triple the national rate—at least in part a reflection of the relative strength of Houston’s housing market, where the price of homes continues [to] post gains. Energy costs fell 20.7 percent over the year as a drop of 41.5 percent in motor fuel costs more than offset increases of 19.6 percent in the cost of residential electricity and 1.0 percent in the cost of residential natural gas.

See the full list of Houston Economic Indicators for June 19, 2009 from the Greater Houston Partnership.