High food, gas prices drive up inflation

Higher prices for gasoline, food and spring clothing helped drive up inflation 2.1 percent last month in the metropolitan area compared with a year earlier, according to a report released Thursday.

The federal Bureau of Labor Statistics said prices grew the fastest year-over-year than at any time since May 2010, when they gained 2.2 percent in the 31-county region that includes Long Island.

Inflation also was up last month 0.5 percent compared from January, said Michael L. Dolfman, regional commissioner for the federal Labor Department, which encompasses the bureau.

Gasoline prices soared 19 percent from February 2010 while home heating oil and other energy used in homes only rose by 1 percent.

The cost of groceries, driven by increases in chicken, cheese, tomatoes, snacks and frozen food, was up 3.8 percent from a year earlier. Restaurant and takeout meals grew a more modest 1.6 percent.

Excluding energy and food, the regional Consumer Price Index increased 1.4 percent in the past year. However, some economists predicted inflation would soon permeate all economic sectors, in part because rising oil prices will drive up transportation costs.

"I think we're going to see inflation roll out into the rest of the economy, from food and energy, sooner rather than later," said Pearl Kamer, chief economist for the Long Island Association business group.

She also noted that consumer spending in Nassau and Suffolk counties remains sluggish based on sales tax receipts. Both counties reported a 4-percent drop in collections last month compared with a year earlier when Long Island and the nation were still suffering the full effects of the recession.

Kamer warned clothing retailers who are passing along the higher cost of cotton and other fabrics that consumers may keep their wallets closed this spring. Apparel prices were up 4.8 percent last month from a year ago.

"Cotton prices have doubled and retailers cannot swallow it," Kamer said. "But passing the cost along to consumers is probably a bad bet. The price tags will make them flee stores."

Still, the cost of some things hasn't gone up in the past 12 months -- and a few have declined.

Natural gas prices were down 6 percent last month compared with February 2010 while electricity was off 2.9 percent. Kamer said the two were related because natural gas is increasingly being used at electricity plants.

The regional price index mirrored the national index, which also increased 2.1 percent year over year. The national figure was 1.1 percent as recently as November.