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LI consumer prices rise sharply in November on higher rents

An exterior view of the New Village

An exterior view of the New Village Apartments at Patchogue, Oct. 8, 2015. Credit: Daniel Brennan

Consumer prices in the metropolitan area were up sharply last month compared with a year earlier because of higher residential rents.

The federal Bureau of Labor Statistics on Tuesday reported that its consumer price index for the 31-county region, which includes Long Island, climbed 0.6 percent in November compared with a year ago. It was the largest year-over-year increase for any month since a 0.8 percent gain in November 2014, according to Martin Kohli, the bureau’s chief regional economist.

Residential rents increased 3.6 percent last month compared with November 2014.

Grocery prices rose 0.9 percent, year over year, while the cost of health care climbed 1.8 percent.

Education and communication expenses, which include textbooks, computers and cellphones, rose 2 percent between November 2014 and last month, the biggest such increase since August 2012, Kohli said.

These price increases were partially offset by a steep drop in the cost of energy.

Gasoline prices were down 27 percent, year over year, while the cost of electricity and natural gas fell 6.4 percent and 0.4 percent, respectively.

Nationwide, the price index rose 0.5 percent compared with November 2014, on the higher costs of automobile insurance, hospital services and tobacco products. Car insurance was up 5.5 percent, year over year. Hospital expenses rose 4.7 percent, and cigarettes and other tobacco items climbed 3.7 percent.

The cost of energy continued to decline in the United States. Gasoline prices fell 24.1 percent in November compared with a year earlier and natural gas was down 11.7 percent.

Some economists said November’s price index reading illustrates discounting by retailers, many of whom are nervous about consumers’ holiday spending.

“This is good news for consumers and not the best thing for retailers,” said Chris G. Christopher Jr., a retail analyst with the economic forecasting firm IHS Global Insight in Massachusetts. “We expect retail trade inventories to fall in November since consumers came out ready to spend and looking for those good deals throughout the month.”

He also predicted the Federal Reserve System would use Tuesday’s uptick in prices “to justify” raising short-term interest rates at Wednesday’s meeting of the Federal Open Market Committee. “U.S. inflation is no longer trending lower,” which was a key concern of central bankers, he said.

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