The inflation rate in the Bay Area rose at a faster pace in April compared with the last several months, a disquieting sign that elevated costs have yet to run their course.
Consumer prices hopped higher by 3.8% in the Bay Area last month compared with the same month the year before, according to a report released Wednesday by the U.S. Bureau of Labor Statistics.
A key factor? Costs for electricity and natural gas delivered by utility behemoths such as PG&E — which soared skyward, the federal government reported.
The Bay Area’s 3.8% annual inflation rate was well above the year-to-year readings for the closely watched consumer price index in recent months.
Over six months going back to October 2023, annual inflation had been averaging only about 2.6%, and the last time the region’s yearly consumer price index topped 3% was in August 2023.
The nationwide consumer price index rose 3.4% in April, an indication that inflation is running hotter in the Bay Area than it is in the United States overall.
Still, despite the faster pace of price increases, the current inflation rate in the Bay Area is far below what it was in June 2022 when the region’s consumer prices jumped by a brutally high 6.8%.
The cost of electricity and natural gas supplied to consumers by a utility company such as PG&E both rose far faster than the overall inflation rate in the Bay Area.
Electricity costs soared by 24.4% in April compared with the year before, the new report showed. And utility-supplied natural gas expenses jumped 14.4% on an annual basis.
“PG&E is getting very expensive,” said Leticia Mora, a San Jose resident. “I’m on the CARE program, and it’s still going up.” The CARE program enables low-income customers to obtain their electric and gas services at a discounted rate.
Consumers also may be feeling pinched because inflation has been at a very high level for two years.
Consumer prices in April were up by a hefty 8.1% over a two-year period.
“Everything is pretty expensive,” said Patrick Baluyot, a Mountain View resident. “It’s hard because of how the economy is with the high prices.”
Gasoline is again becoming more costly after a respite of a few months that saw annual prices drift lower. Prices for regular unleaded gasoline zoomed higher by 12.3% in April compared with the same month the year before.
Food prices rose at less than the overall inflation rate, although food consumed away from home at places such as restaurants rose at a much faster pace. Over one year ending in April, the price of food consumed at home rose by 2.5% in the Bay Area, while the cost of food consumed away from home jumped 4.4%.
Here are examples of how prices have changed for some categories of food over the most recent one-year period ending in April:
— Cereals and bakery products, up 4.1%
— Dairy products, up 3%
— Meat, poultry, fish and eggs, up 1.3%
— Fruits and vegetables, down 0.3%
Brett Highly, a San Francisco resident, noticed how expensive gasoline is in the Bay Area after he returned from a trip to Indiana to visit family members.
“It was easily $2, or $2.50, more a gallon here,” Highly said. “Indiana was around $4 a gallon.”
The Federal Reserve has kept interest rates high to curb the sharp rise in consumer prices.
However, the most recent government reports suggest the Central Bank has yet to tame inflation in any meaningful way, in the view of Brian Wesbury, chief economist with First Trust Advisors, an Illinois-based investment firm.
“It looks clear that the progress against inflation made from mid-2022 to mid-2023 has stalled,” Wesbury wrote in a research note that he co-wrote with First Trust Advisors deputy chief economist Robert Stein.
Federal Reserve officials have hinted that the Central Bank might be able to start reducing interest rates sometime this year. Wesbury suggested that might prove elusive.
“Baseline inflation has remained stubbornly sticky above 3%, casting doubt on the Fed’s ability to cut rates in 2024,” Wesbury wrote in the research note.
In April, this news organization interviewed PG&E Chief Executive Officer Patricia Poppe about the soaring cost of electricity and gas for the utility’s customers.
“We see a future where customers’ bills can start to come down,” Poppe said after an event PG&E hosted in Richmond.
Poppe said monthly bill costs could flatten or decrease by 2025 or 2026.
“We see prices falling in the future, and we are working every day to make that happen,” she said.
But Mora, the San Jose resident, was skeptical about Poppe’s assertions that monthly electricity and gas costs would begin to decrease.
“I don’t believe it’s going to happen,” she said.
