Bay Area inflation eases, but consumers still squeezed

The inflation rate in the Bay Area has cooled off, but not everyone’s noticed the difference.

“Everything is going up, except our pay,” said Anabel Vicente, a mother of three who lives in the Canal neighborhood of San Rafael. “I don’t know what’s going on, but it’s expensive, it’s hard for us.”

The consumer price index in the Bay Area rose at an annual rate of just 2.8% in October, according to a recent report from the U.S. Bureau of Labor Statistics. That marks the slowest rate of annual increase since February 2021, when the region’s inflation rate rose 1.6%. The cooling trend is also welcome news for some consumers shopping for the Thanksgiving holiday, especially with the price of some grocery items leveling off.

Bay Area gasoline prices fell and costs for many kinds of foods eaten at home, including meat, either declined or rose by just a tiny amount, when measured on a yearly basis.

The nationwide inflation rate rose at a yearly pace of 3.2% in October, the federal labor agency reported.

Electricity services — such as those provided by utility behemoths like PG&E — have skyrocketed in cost in the Bay Area, a grim counterpoint to the otherwise hopeful trends in overall inflation, the report shows.

Over the one-year period that ended in October, the cost of electricity provided by a utility such as PG&E soared at a pace that was five times faster than the overall Bay Area inflation rate.

Since January, the average residential PG&E customer bill has increased from $240 to $260, said Mike Gazda, a spokesperson for the utility.

For gas-only customers, the bills have risen from $67.89 in January to $69.35. For electricity-only customers, bills have increased from $172 to $190 for the average customer, Gazda said.

“Unfortunately, for low-income households, that spike in the power bill is like a regressive tax,” said Rob Eyler, chief economist of the Marin Economic Forum. “It could also act as a regressive tax on small businesses that are heavily reliant on power, as the pop up in price is going to pinch their bottom line. All the more reason to go to solar.”

The utility also offers 20% monthly discounts through the California Alternative Rates for Energy, or CARE, public assistance program for families in need.

Vicente said her family of five typically pays around $150 per month for gas and electricity. That shot up to $270 for last month, she said.

And the ominous report on electricity costs arrives as state regulators authorize — yet again — a big increase in PG&E monthly bills.

Prices for an array of food items consumed at home, including meat, dairy, poultry, fish, eggs and cereal, all showed declines or moderate increases. Food away from home, though, continues to become more expensive and rose at an annual pace that was nearly double the overall inflation rate in the Bay Area.

Goods and services categories that showed increases over the past 12 months include electricity delivered by utility companies such as PG&E, up 14%; food consumed away from home, up 5%; apparel costs, up 2.9%; rental of apartments or houses, up 2.8%.

Also on the rise were food prices, both at home and away from home, up 2.8%; cereals and bakery products, up 2.8%; meat, poultry, fish and eggs, up 2%; food consumed at home, up 1.9%

Medical care was up 1.1%; household furnishings, up 1.1% and tuition, educational fees, child care, up 0.1%.

Nationwide, food prices have increased for 39 straight months, First Trust Advisors, an investment firm, stated in a research note last week.

Even with the cost of food leveling off, prices remain sky-high compared to where they were just two years ago.

Compared to October 2021, overall consumer prices in the Bay Area have risen by 8.9%. Over the same two-year period, prices have soared 13% for food, 21.2% for unleaded gasoline and a shocking 35.7% for electricity provided by utilities such as PG&E.

To combat inflation and slow economic growth, the Federal Reserve has moved interest rates higher. But this effort could choke economic growth so much that a severe downturn could ensue.

“We continue to believe that a monetary policy tight enough to bring inflation down is also tight enough to induce an eventual recession,” Brian Wesbury, chief economist of First Trust, wrote in the research note to investors. “As for the economy, we continue to believe a recession is on the way.”

Eyler said the labor market is something to monitor, as there is a possibility of a bump in job losses.

“As prices are going down, and there is a higher cost of credit, there could be a slow down in consumerism,” Eyler said. “The effect is that businesses could stop hiring, or cut jobs to cut costs.”