Food, housing help push area inflation

Higher prices for groceries and housing helped to boost inflation 3.3 percent last month in the metropolitan area compared with a year earlier.

The increase was the largest in almost three years and continues a pattern first seen in April, the U.S. Bureau of Labor Statistics said Thursday. Retail prices last grew more rapidly in October 2008, when they were up 4.3 percent year over year in the 31-county region that includes Long Island.

Inflation also rose 0.3 percent last month from June.

Falling prices for clothing were offset by increases for food and rent, said Michael L. Dolfman, regional commissioner of the federal Labor Department, which encompasses the bureau.

Gasoline prices fell 1.4 percent in July compared with a month earlier, the second consecutive decline. However, they were 38 percent higher than in 2010.

The cost of groceries increased 5.4 percent in July year over year, propelled by prices for potatoes, apples, frozen foods, coffee, sugar, artificial sweeteners and soda. Grocery prices also were up 0.9 percent last month from June.

Aboard a Long Island Rail Road train from Long Beach to Manhattan Thursday, some commuters expressed frustration with the cost of living and worry about job security. Several people said they had friends who had been unemployed for more than a year.

"They say gas prices are falling but I think they are still very high compared with last year," said Irv Katz, 32, an electrician from Oceanside. "And jobs are a real problem. If you don't have one now it looks like you are out of luck for awhile."

Excluding food and energy, the regional Consumer Price Index rose 1.8 percent in the past year. Categories with big increases included health care, 2.9 percent; and housing, 1.6 percent.

Nationally, inflation climbed 3.6 percent last month from 2010 and 1.8 percent if food and energy are excluded. The latter measure, called core inflation, is a key number closely monitored by the Federal Reserve's interest-rate-setting committee.

Arijit Dutta, senior economist at Moody's Analytics, predicted consumer prices nationally would "moderate in the coming months before pushing decidedly higher again by mid-2012." He said this would free the Fed to focus on boosting U.S. economic growth, which has been anemic.

Dutta added that the economic outlook "still calls for the U.S. economy to maintain its recovery and gradually attain self-sustaining momentum, but vulnerability to external shocks has risen sharply." These shocks include the debt crisis in Europe, political gridlock in Washington and a credit crunch in developing countries.

Separately Thursday, the state Taxation and Finance Department released data for July about shopping activity on Long Island. July sales-tax receipts rose less than 1 percent in Nassau from a year earlier and were up 2.6 percent in Suffolk. Experts said such gains are small compared with those seen in early 2010.