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Falling energy costs keep metro-area prices in check

A gas price display at a Citgo station

A gas price display at a Citgo station on Old Route 25A in Rocky Point on Monday, Feb. 8, 2016. Credit: Joseph D. Sullivan

Consumer prices in the metropolitan area rose a little more than half a percentage point in February compared with the same month a year earlier, as low energy prices kept a check on increases in residential rents and health care.

The federal Bureau of Labor Statistics reported Wednesday that its consumer price index for the 31-county region that includes Long Island was 0.6 percent higher in February than a year earlier.

However, inflation was more robust when the cost of energy and food, which can be volatile, aren’t included. The bureau’s index of prices that excludes food and energy was up 2.1 percent in the metropolitan area in February, year over year.

This core index of all items minus energy and food has shown annual price increases of 1 percent to 2 percent since late 2014. The gains are higher than in the index that tracks all prices, including food and energy, because falling gasoline and grocery prices have had an effect, said Bruce Bergman, an economist in the bureau’s Manhattan office.

“In the past whatever volatility we saw with energy prices was often tempered by what was happening with food prices...That’s not happening now because we are seeing declines in food prices as well,” Bergman said.

In February, residential rents increased 4 percent in the New York area compared with a year earlier.

The cost of health care rose 2.2 percent last month compared with February 2015, and clothing was up 0.9 percent.

In contrast, electricity prices fell 17.3 percent last month compared with February 2015, the largest year-over-year decline since 1971. Gasoline and natural gas were also off, down 18.4 percent and 9.7 percent, respectively.

The cost of groceries declined 0.8 percent, year over year.

Separately on Wednesday, the Federal Reserve Bank of New York released a survey of service firms in the metropolitan area showing that they plan to raise their employees’ salaries faster than the inflation rate over the next year.

The firms predicted they would hike workers’ pay, including benefits, an average of 3.44 percent. They said local consumer prices would rise 2.69 percent. The poll was conducted earlier this month.

Nationally, consumer prices rose 1.0 percent in February compared with the same month a year earlier. Excluding energy and food, the price index rose 2.3 percent, the largest year-over-year gain since May 2012, the bureau said.

Alan Levenson, chief U.S. economist for T. Rowe Price mutual funds, said the increase in the core index, minus food and energy, “is unlikely to be sustained but the underlying trend is solidly greater than 2 percent.”

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