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D-FW inflation rate climbs to 9.1% with food, gas and utilities busting budgets

The Texas Squeeze: A series examining the high cost of high growth in North Texas.

Inflation in Dallas-Fort Worth continues to run hotter than the nation, with the local rate rising to 9.1% in May as everything from groceries and gasoline to monthly utility bills soared.

The D-FW rate, reported by the Labor Department every other month, checked in a half-percentage point higher than the new US rate of 8.6%.

Gasoline prices are showing no let-up, pushing inflation to its highest level since 1981. Prices at the pump collapsed with demand when the pandemic started and then inched back up with oil prices and the opening of the economy, but took off exponentially since January .

Gas prices are now forecast to reach $5 a gallon in Texas. The national average gas price on Friday was $4.99 a gallon and the Texas average was $4.65, according to AAA Texas.

Shoppers know their food bills have been getting bigger for even longer. Grocery prices have been rising since January 2021 both in D-FW and the US, according to the Bureau of Labor Statistics’ Southwest region office.

The 11.6% increase in D-FW food prices was the highest increase since June 1979, said Julie Percival, regional economist for the US Labor Statistics in Dallas.

Higher energy costs are contributing to higher food prices, particularly in dairy products, which had a 7.5% increase just since March and increased 14.5% from a year ago.

Items have to be kept cold, Percival said. “Ice cream prices in particular went up. Demand goes up this time of year, but there’s also an increase in the cost of facilities keeping it frozen.”

Higher energy prices have a “the downwind effect” on other industries that’s often underestimated, she said. “Producers don’t have a choice but to pass on the increase to consumers.”

Overall, D-FW prices increased 1.8% since March, the last read on local inflation. The cost of renting and owning a home increased 7.3% from a year ago and 1.5% in the past two months. It was the largest contributor to the two-month increase as the biggest single household expense, Percival said.

Gasoline prices in May were 50.6% higher than a year ago in D-FW and food at home prices rose 14.6%. In response to rising gas prices, the Internal Revenue Service on Thursday raised the standard mileage reimbursement rate for business travel for the remainder of this year. The new rate of 62.5 cents a mile is 4 cents higher than the beginning of the year.

All major food categories posted double-digit percentage increases. Meat, poultry and fish prices increased 16.4%. Fruits and vegetables shot up 14.6%. A few food items that saw price declines were pork and eggs, Percival said.

New vehicle prices increased 5.7% from a year ago, she said, and “that’s starting to look more normal as opposed to the double-digit increases we’ve been seeing.”

Texans are experiencing the sticker shock of higher home electricity and natural gas utility prices, which respectively rose 28.1% and 27.1% in May from a year ago. Electricity rates in Texas are up over 70% since this time last year, hitting levels not seen since Texas deregulated electricity over two decades -ago.

“We’ve had nine straight months of double-digit increases in electricity,” Percival said. D-FW’s 28.1% increase in electricity compares with a 12% increase posted in the US

The Federal Reserve Bank has a target to get inflation back down to around 2%, but economists say that’s going to be harder to do as people keep spending and gasoline prices keep rising. The Fed has said it will raise interest rates, a tool it uses cool the economy to lower inflation without tipping into a recession.

Spending is rising at a 4% annual rate, twice as high as historical levels and retailers have said they continue to see a healthy consumer.

But inflation is hitting households differently and those with lower incomes feel less confident about the economy even though wages have been rising and jobs are plentiful.

Consumer confidence dipped slightly in May after rising in April, and inflation was “top of mind,” according to the Conference Board.

Inflation is having an impact on spending.

Purchasing intentions for cars, homes, major appliances, vacation plans softened in May, “likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services,” said Lynn Franco, director of economic indicators at The Conference Board .

Twitter: @MariaHalkias

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