Housing, energy and food costs push Denver’s inflation higher than the national rate

Higher housing, energy and food costs were reasons for the Denver-area’s 5.7% inflation rate increase in March from a year ago. This was higher than the national 5% rate, according to the U.S. Bureau of Labor Statistics, which does not track inflation rates by states. 

The good news for consumers is that this means prices aren’t rising as fast as they were last year. But this also means that consumer prices are still rising, and that’s on top of March 2022’s 9.1% increase.

The top items that changed in price last month:

Higher ▲  

• Nonalcoholic beverages were up 16% 
• Fruits and vegetables, up 14.1% 
• Dairy and related products, up 12.5%
• Rent of primary residence, 10.3%
• Food away from home, up 10.3%
• Owners’ equivalent of rent, up 7.8%

Lower ▼

• Used cars and trucks, down 11.5%
• Gasoline, all types, down 2%
• Electricity, down 2.9%
• Medical care, down 0.7%

You may not have noticed the increases because we had experienced much higher inflation last year, when the Denver-area rate hit 9.1% in March 2022. That jump from the Federal Reserve goal of 2%-3% seems to make the latest increase less of a shocker.

“We’re still accelerating fast, just not accelerating as fast as we were a few months ago,” said Joe Craig, interim faculty director for the University of Colorado Colorado Springs Economic Forum. “That’s hard for consumers to notice. I would posit that a lot of consumers are still thinking, ‘Oh my god, prices are still going up. Why is the Fed still doing this? They’re slowing down our economy.’ Yes. But not at the same rate, which is a hard concept to get across and a hard concept to feel because we’ve been anchored to that 2% to 3%.”

Inflation hits lower-income households much harder than the better off. When the price of a dozen eggs or a gallon of gasoline increases, everyone pays the same amount. 

Higher inflation here “probably is just indicative of the fact that Denver is wealthier on average than the West as a whole and the nation,” Craig said. “The higher income brackets are still continuing to spend and that’s probably what we’re seeing with higher inflation in Denver. It is unfortunate though for the working class of Denver, but there’s always a tension like that in popular big cities.”

Looking at core inflation of the past two months, however, points to a more regional impact, said Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business, University of Colorado Boulder. Remove the volatile pieces like food and energy prices and Denver’s core inflation was at 5.6%, or the same as the nation’s.

“I think the difference is really that the supply issue that we had was a more local phenomenon that drove up fuel prices locally,” he said. “I would expect that to come down because our prices are now coming down pretty quickly. … And on the housing front, we’re still leading the nation down in terms of (Federal Housing Finance Agency) home price index. I think we’re actually going to see the Denver metro region normalize with the U.S. as we progress through the year, perhaps even lower than the U.S.”

➔ Hmm… gas prices are up again. According to the AAA gas price tracker, Colorado’s average price for a gallon of regular gas was $3.57 on Friday, up 11 cents from last week and down 32 cents from a month ago. US prices also went up by 8 cents in a week. AAA’s explanation? “The main culprit is the high cost of oil, gasoline’s main ingredient, which is hovering in the low $80s per barrel. The national average has risen daily since March 29.” >> See gas prices