2/2/2005 4:04:18 AM -- St. Louis Post-Dispatch
Inflation gets grip on St. Louis area
St. Louis Post-Dispatch via NewsEdge Corporation : Feb. 1--The gas pump wasn't the only place St. Louisans faced higher prices last year. They also shelled out more for food, housing and clothes, as consumer prices here rose at their fastest rate in more than a decade, according to U.S. Labor Department figures.
Inflation made a comeback nationwide in 2004 after a several-year hiatus. And the St. Louis area saw consumer price increases that beat the U.S. average.
Still, economists yawned Monday when asked to measure this modest inflation by historical standards. By comparison, prices grew more than twice as fast each year in the late 1970s, they noted.
The big problem (in 2004) is that we have gasoline and medical care prices that grew much more than average, said Bryan Bezold, an economist with the St. Louis Regional Chamber & Growth Association. St. Louis may be a little bit higher than the U.S., but that isn't too crazy since there's evidence that (our economy) grew more than the nation.
These latest numbers are from the consumer price index, or CPI, which measures the cost of a fixed basket of goods over time. The basket includes items ranging from housing to education to health care.
Prices rose 4 percent in the region between 2003 and 2004, according to the CPI for all urban consumers. That's the largest such increase since 1990, when the CPI for St. Louis shot up 5.2 percent.
The national CPI, meanwhile, increased 2.7 percent in 2004, based on annual averages.
For these price increases, consumers can thank an improving economy that's fattened some workers' wallets while putting others back in jobs over the last year. As the economy grew, demand for goods rose and companies became less hesitant to raise prices, economists said.
Locally, the biggest price hikes came at an obvious place: the gas pump. Gasoline prices rose 19.1 percent in 2004.
Kenneth Matheny, a senior economist at Macroeconomic Advisors LLC in Clayton, said the inflation of 2004 follows a three-year period during which consumer price increases were minuscule, rivaling even the historic lows of the 1960s.
In the years leading up to 2004, The economy was weak and sluggish, and unemployment was above normal levels. Companies held the line on prices, Matheny said. Now, firms have more pricing power.
In the case of rising apparel prices, Bezold, the RCGA economist, said there's evidence that consumers with more income have been shopping at higher-end stores.
Housing prices have risen as low mortgage rates fueled a housing boom that's seen ownership climb higher each year, he said.
The budding inflation last year caught the attention of the Federal Reserve Bank. Anticipating rising prices, the Fed began to hike interest rates to fight inflation and is expected to do so again this week.
Consumers with short memories may gasp at the rise in gas prices last year. In 2000, however, gas prices shot up 31.8 percent in the St. Louis area, according to the CPI.
Consumers also should remember that inflation is not bad for all people, said Joseph Haslag, an economist at the University of Missouri at Columbia. He cited housing prices, which grew at about twice the national average in the St. Louis area in 2004, according to the CPI.
If I own my own house, that's a good thing, Haslag said.
CPI INCREASES
The consumer price index for the St. Louis area rose 4 percent in 2004. Below are the changes for selected items:
Gasoline -- 19.1 percent
Housing -- 5 percent
Apparel -- 4.8 percent
Food -- 3.8 percent
Alcoholic beverages -- 0.8 percent
Household furnishings -- -0.4 percent
Electricity -- -1.5 percent
To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com.
Inflation gets grip on St. Louis area
St. Louis Post-Dispatch via NewsEdge Corporation : Feb. 1--The gas pump wasn't the only place St. Louisans faced higher prices last year. They also shelled out more for food, housing and clothes, as consumer prices here rose at their fastest rate in more than a decade, according to U.S. Labor Department figures.
Inflation made a comeback nationwide in 2004 after a several-year hiatus. And the St. Louis area saw consumer price increases that beat the U.S. average.
Still, economists yawned Monday when asked to measure this modest inflation by historical standards. By comparison, prices grew more than twice as fast each year in the late 1970s, they noted.
The big problem (in 2004) is that we have gasoline and medical care prices that grew much more than average, said Bryan Bezold, an economist with the St. Louis Regional Chamber & Growth Association. St. Louis may be a little bit higher than the U.S., but that isn't too crazy since there's evidence that (our economy) grew more than the nation.
These latest numbers are from the consumer price index, or CPI, which measures the cost of a fixed basket of goods over time. The basket includes items ranging from housing to education to health care.
Prices rose 4 percent in the region between 2003 and 2004, according to the CPI for all urban consumers. That's the largest such increase since 1990, when the CPI for St. Louis shot up 5.2 percent.
The national CPI, meanwhile, increased 2.7 percent in 2004, based on annual averages.
For these price increases, consumers can thank an improving economy that's fattened some workers' wallets while putting others back in jobs over the last year. As the economy grew, demand for goods rose and companies became less hesitant to raise prices, economists said.
Locally, the biggest price hikes came at an obvious place: the gas pump. Gasoline prices rose 19.1 percent in 2004.
Kenneth Matheny, a senior economist at Macroeconomic Advisors LLC in Clayton, said the inflation of 2004 follows a three-year period during which consumer price increases were minuscule, rivaling even the historic lows of the 1960s.
In the years leading up to 2004, The economy was weak and sluggish, and unemployment was above normal levels. Companies held the line on prices, Matheny said. Now, firms have more pricing power.
In the case of rising apparel prices, Bezold, the RCGA economist, said there's evidence that consumers with more income have been shopping at higher-end stores.
Housing prices have risen as low mortgage rates fueled a housing boom that's seen ownership climb higher each year, he said.
The budding inflation last year caught the attention of the Federal Reserve Bank. Anticipating rising prices, the Fed began to hike interest rates to fight inflation and is expected to do so again this week.
Consumers with short memories may gasp at the rise in gas prices last year. In 2000, however, gas prices shot up 31.8 percent in the St. Louis area, according to the CPI.
Consumers also should remember that inflation is not bad for all people, said Joseph Haslag, an economist at the University of Missouri at Columbia. He cited housing prices, which grew at about twice the national average in the St. Louis area in 2004, according to the CPI.
If I own my own house, that's a good thing, Haslag said.
CPI INCREASES
The consumer price index for the St. Louis area rose 4 percent in 2004. Below are the changes for selected items:
Gasoline -- 19.1 percent
Housing -- 5 percent
Apparel -- 4.8 percent
Food -- 3.8 percent
Alcoholic beverages -- 0.8 percent
Household furnishings -- -0.4 percent
Electricity -- -1.5 percent
To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com.
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