CalMatters
By Levi Sumagaysay, CalMatters
Pandemic-era inflation has fallen from its peak two years ago, but the costs of many goods and services continue to rise and are still higher than before the onset of COVID-19, a couple of closely watched economic indicators show.
Prices have grown about 20% overall since 2020, according to an analysis by the California Legislative Analyst’s Office based on the most recent consumer price index data. Over the past couple of months, prices in California appear to have risen slightly more than the country as a whole, according to data from the Bureau of Labor Statistics.
Continued rising prices are why many Californians are struggling in an economy that’s widely considered to be doing OK because the nation has avoided a recession, experts say.
While a slowdown in inflation, or price growth, is “great news, it’s not like those prices are declining,” said Sarah Bohn, economist and director of the Public Policy Institute of California Economic Policy Center. “When you go to the grocery store, your total bill is still much higher overall than a few years ago,” she said.
What’s more, Bohn said Californians’ wages have not kept up with inflation: “Wages only grew 15% than before the pandemic. On paper, that looks amazing, like a $5-an-hour increase. But after inflation, it feels like a pay cut — I calculated that it’s like a $1.25-an-hour cut.”
That’s a big concern, especially for low- and middle-income families who “have a lot less flexibility in terms of what they’re spending their resources on,” Bohn said.
Nationwide, services are mostly responsible for continued inflation, Bureau of Labor Statistics data shows. The prices of goods such as new vehicles, and meat, poultry, eggs and fish were unchanged from December to January, while overall food prices were up almost 0.4%, slightly lower than the previous two months. Consumer costs for services such as electricity, rent, medical care, airfares and health and auto insurance all rose.
But in California, high prices for both goods and services persist.
Food banks say the cost of buying food hasn’t gone down — and the demand for their services remains high as pandemic aid has expired and inflation remains.
While the San Francisco-Marin Food Bank hasn’t seen “major” price increases for meat, and produce prices have stabilized, it continues to see high prices for some food, said spokesperson Keely Hopkins. The average price the food bank has paid for eggs has risen by $2.27 a dozen over the past eight months, Hopkins said.
High food prices have also been a problem for the Los Angeles Regional Food Bank, which buys 10% of its inventory to supplement donated food: The food bank now serves an average of 900,000 people per month, two and a half times the monthly average pre-pandemic.
“(That’s) the impact of the end of COVID-era programs such as the SNAP/CalFresh benefit boost and the continued impact of inflation,” said David May, a spokesperson for the food bank.
On the services side, some California residents are struggling to get affordable auto insurance, with premiums rising 17.7% from 2023 to 2024, according to Bankrate.com. Prices for electricity have also increased, as regulators approve rate hikes by major utilities such as PG&E.
As for rent, “shelter is the major driver of services inflation in the inflation numbers,” said Jerry Nickelsburg, senior economist for the UCLA Anderson Forecast. He added that “we are seeing a slowing in rental rates (negative in some parts of the state), but as leases come due and rent-stabilized units are vacated, average rents increase to today’s market rents.”
Rent in California is 38% higher than the national median, according to real-estate listings company Zillow. This month, the median rent of $2,755 in the state rose $5 from the month before but is $195 less than it was in March 2023, Zillow data shows.
Meanwhile, the personal consumption expenditures price index, which excludes food and energy costs, rose 0.4% in January from the previous month, and 2.8% from the previous year, according to data released by the Commerce Department’s Bureau of Economic Analysis last week. The Federal Reserve is said to focus more on this index instead of the consumer price index because it more accurately reflects actual consumer spending. Either way, since the Fed’s target inflation rate is 2%, continued inflation means that it is not likely to slash interest rates anytime soon — meaning possible continued slowness in home buying and in getting loans to buy big-ticket items such as cars, and in borrowing by businesses.
Nickelsburg said he does not expect the Fed to reduce interest rates in the first half of the year. That’s in line with the expectations of other economists, such as those from Wells Fargo, who said in a report last month that continued inflation means the “road back to 2% inflation likely will have some potholes.”
This article was originally published by CalMatters.
People are much better off than they admit or than articles such as this pretend to survey. Most budgets have a lot more “fat” in them than acknowledged. Giving up $10 a cup coffee, for example, wouldn’t be that big a deal and would pad the budget for real needs. We don’t need streaming services by and large. We don’t have to go to Disneyland with the kids. We don’t need a new cell phone every year of so. People are making choices that are pushed on them by peers and advertising. With very little discipline and a bit of prioritization most folks can do just fine even as some things rise in price. The cost of a dozen eggs at the “inflated” price is pretty small compared to the cost of dining out for breakfast.
you must make a lot more money than the rest of us. I’m a single parent, two teens. ie cheese has gone up 75% in cost. Bread has gone up 50% in cost, eggs have tripled in cost. Basic food staples including rice, have sky rocketed. This is at Ralphs/Kroger.
You pay $10 for a cup of coffee? I don’t and i do not know anyone who would. You say we don’t need this or that or the other thing, yet you aren’t in the shoes of those that you’re lecturing here. I pay $5 a month each, $10 total for two streaming services with adds to keep the kids entertained. $10 a month for entertainment for 3 people is pretty cheap. Yet I go hungry so the kids can eat. Please don’t lecture people on matters like this until you walk in their shoes for a mile or two. New cell phones each year? I’ve had the same one for 7 years and only one of my kids has one and its $35 and it’s two years old.
folks can do just fine even as some things rise in price. Right. Again, you must be sitting on a lot of cash to talk like that. Gas, over $5 gl, food prices have skyrocketed, water rates and electricity have jumped, yet local wages have not.
I work a full time job and a part time job, yet i go hungry. i must just be spending all of this extra cash on garbage and disneyland according to you? Would be nice if there was some extra cash. My kids have never seen an amusement park.
Our food costs have gone up 35% in two years. We try to buy bulk foods at Costco, but even shopping there has increased, although not as much as local grocery stores. We used to go out to a moderate restaurant (not fast food) , once a week- That has ceased, unless a special occasion comes up. Restaurant prices have gone WAY UP the last 3 years. I don’t know how small owned / non chain restaurants will make it unless there are some serious changes in food prices…
Maybe it’s time for you to follow your own perennial advice to the homeless, and move someplace with a lower cost of living.
@ Anonyomos (ChickenS–t) The reality for our family is that we can sustain this insane upswing in food prices, many cannot. Yeah, the Homeless/vagrants/Transient population will bounce as they have food handouts being supported by Homeless Inc. Then the “poor” housed-Section 8 – government assisted EBT populaton is covered as well… The problem is that the “middle class” are continuing to get squeezed… You know, the people who saved buy a house and have a mortgage, they drive with insurance with premiums that have jumped 40% in CA this last year, they PAY for medical insurance, home utilities and now rising food costs… You are correct, many of the working middle-class (in SB it’s those making $150k a yr) are leaving the State. California is truly becoming a lop-sided population that is supported by the government, and that is not sustainable… Although, it keeps the Democratic politicians in power- the power over the people, which is their end-game.
COAST – if you’re so brave with your name, how about signing your real name? “COASTWATCH” is just as “Anonyomos (ChickenS–t)” as “Anonymous.
“The reality for our family is that we can sustain this insane upswing in food prices” – Doesn’t sound like it if you can’t eat out except for birthdays….
Sorry, but no pity for those who treat / think of others like trash.
@ SACJON- Not looking for your “Pity”… Actually, I take pity on you as you apparently missed your mental health appointment this month as you can’t stop with your obsessive commenting. The point of my post is that the middle class are the people who are most affected by the huge increase in the costs of living. As Californians, we are penalized by State government that penalizes corporations that do business here. They (industry/corporations) simply pass on the costs to consumers. Case in point, insurance companies…Whether Medical, Vehicle or Homeowners insurance.
Yet here you are matching me comment for comment today and calling people “ChickenS-t” for not using their real names, “CoastWatch.”
Look, I agree with you about the middle class. But again, I have no pity for those, like you, who treat others with such contempt. And no, I’ll NEVER let your lies and hate, nor your buddies’, fester here without countering and calling it out.
“elitist snob” LOL if you only knew. Anyone I know would be doubled over laughing at that. I’m as far away from elitist or snobby as a person can get. You’re just simple, hateful, racist and in general, not very honest it seems. In fact, everything you say about me is an outright lie, given my history of comments and some simple, elementary level reasoning abilities (which you clearly lack):
Because I don’t verbally crap all over the homeless and want them rounded up in camps, doesn’t mean I hate shop owners.
Because I don’t think people should be imprisoned for most minor, non-violent crimes doesn’t mean I hate law abiding citizens.
Because I disagree that there is an “open border policy,” doesn’t mean I hate US citizens.
Not sure what at all you mean about me having no compassion for “traditional families,” but given your hateful rants, I’m sure you think because I tolerate LGBQT people, I hate straight families (like my own).
You see, you’re just wrong. Always wrong, always lying, always boiling over with unbridled hate and ignorance.
You know who I DO hate? People like you.
Why bother engaging this elitist snob. He has zero compassion for any hard working lower middleclass honest person with a traditional family. He is only for the skells. The criminals, the indigents, the druggies, the illegals etc Like anonymous, his attitude is ‘move somewhere affordable.’
This situation is what happens when you vote in far left lunatics like Joe Biden. Newsom ready to charge you a higher energy bill based on your income. These people are communist!
Racist moron says what?
CHALF – I LOVED that movie as a kid! As to the rest of the nonsense…. meh. I choose not to live my life in fear because a fraudulent billionaire who doesn’t care about me told me to. Sorry you’re so terrified of life, that must be hard on those around you.
Whose fault is the huge jump in insurance premiums? I posit that we can lay that at the feet of the insurance companies, not one political party. Who are these regulators that have approved the massive increases?
The homeowner/fire/flood insurance industry is legitimately affected by all the fires and floods, of course. But why is my car insurance twice what it was last year, despite having the same old car, and no claims or accidents?
Time to pull yourself up by your bootstraps?
We grow our own food. Lofl. My wife had 350 reasons to put in an edible garden, primarily quality of the produce we get at Lazy and Vons, the pandemic, sustainability, climate change, and because she thought the kids were getting too entitled. Well actually that was the main reason. So she wanted me to force them to basically be farm workers. As you can imagine that went over like a lead balloon. She had already lost all 3 of them to Starbucks and online access bribery by the time each one hit 9 years but there is no price high enough to get them to grab a pitchfork. It’s just way too colonial and oppressive as they pity people who work in the fields rather than respect that’s where their food actually comes from. To the point that now I have to pay actual farm workers from progressive and hansens so she has something to say we grew it here about when guests come over.
Thanks Joe! Exactly what we all wanted (besides the high gas prices).