Gas price spike one reason for cost of living increase
Bay Area wages are not keeping pace with the rise in inflation, which has been stuck above 3 percent a year, according to a recent California survey
An unwelcome economic guest is making itself at home in the Bay Area: Inflation has spiked in the region this year, according to this news organization’s analysis of a government report released Thursday.
After a decade of tame increases, inflation now appears to be stuck above 3 percent a year, a new consumer price index released by the U. S Bureau of Labor Statistics shows.
Gasoline prices and the cost of renting a residence were major drivers of the jump in consumer prices in the Bay Area.
Even worse, average wages in most of the Bay Area aren’t keeping up with the cost of living in the region, a separate survey by the state’s Employment Development Department shows. In 2017
compared with 2016, average annual wages rose by 0.4 percent in Santa Clara County, 1.4 percent in the East Bay and 4.7 percent in the San Francisco-San Mateo region, the EDD study determined.
Here is what’s going on with the cost of living. Over a five-year period from2008 through 2012, the Bay Area consumer price index rose at an average of 1.9 percent. From2013 through 2017, the average annual increasewas 2.8 percent, reaching 3 percent in both 2016 and 2017.
The two government surveys for Bay Area inflation released so far in 2018 showed that inflation soared to an annual rate of 3.4 per- cent during the one-year period that ended in February and to 3.2 percent for the 12-month period that ended in April.
And those who suspect that the cost of living ismore expensive in the Bay Area than elsewhere are correct: The U.S. consumer price index rose just 2.5 percent during the one-year period that ended in April.
Two major items, renting shelter and the cost of gasoline, have pushed inflation higher, the report indicated.
“Unless you are Rip Van Winkle asleep for the past 20 years, the BayArea’s skyrocketing housing prices should surprise no one,” said Carl Guardino, president of the Silicon Valley Leadership Group. “In the Bay Area and California, we don’t build enough housing for sale or rent to meet our current population needs, let alone future growth.”
Over the one-year period that ended in April, the cost in the Bay Area of renting a primary residence rose 5.7 percent, while the cost of gasoline rocketed 18.1 percent higher, the government stated.
“Gas prices in California are about 80 cents higher than the rest of America. This isn’t inflation, this is highway robbery,” said Jamie Court, president of Consumer Watchdog. “The oil companies aremaking huge profits from their refineries in California. Oil companies are vipers that are sucking the life out of the California economy.” Court warned that the sharp rise in gasoline prices could trigger collateral increases.
“This increases costs for restaurants, for delivery companies, grocery stores, for furniture companies; it makes everything more expensive,” Court said.
To be sure, oil and gasoline prices can fluctuate partly due to the strength or weakness of the economy. In good economic times, businesses expand and their ranks swell, which can intensify demand for energy. The opposite can happen when companies shed workers or close their doors.
In contrast, it’s possible that the factors that keep housing and rental costs at or near record levels might not continue.
“We live in a state that needs 200,000 new homes a year, and in the last two decades, we averaged 80,000 a year,” Guardino said. “Now we are waking up to the crisis that we created ourselves, and it’s time to fix it.”