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

The Mercury News Weekend - - SPORTS - By Ge­orgeA­va­los gava­los@ba­yare­anews­group.com

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.”

STAFF FILE PHOTO

The price of gas is one of the rea­sons the cost of liv­ing has in­creased in the Bay Area for 2018.

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