Major rise in inflation as food costs grow

Despite a drop in gasoline prices, inflation rose 3.2 percent last month in the metropolitan area compared with a year earlier.

That increase was the largest in nearly three years and continues a pattern first seen in April, the U.S. Bureau of Labor Statistics announced Friday. 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 increased 0.2 percent last month from May, the smallest month-over-month gain since December.

This was largely due to falling fuel costs, which were offset by rises in food and housing, said Michael L. Dolfman, regional commissioner of the federal Labor Department, which encompasses the bureau.

Pump prices fell 4.5 percent in June compared with a month earlier but still climbed a whopping 38.4 percent from 2010.

In the past week, gas prices have risen nearly 8 cents on Long Island.

The cost of groceries increased 3.8 percent in June year over year, propelled by prices for chicken, beef roasts, apples, milk, cakes, cookies and coffee. They also were up 1 percent last month from May.

Outside Waldbaum's supermarket in South Huntington on Friday, shoppers said they have postponed vacations and buying cars and other big-ticket items because more of their income is going toward food, fuel, rent and other necessities.

"There's only so much to go around and I have to feed my babies," said homemaker Beth Schwartz, referring to her two dogs and a cat. "I really need a new car but right now that's out of the question," said the 53-year-old homemaker from Melville.

Fiscal experts expressed concern about the regional Consumer Price Index, in particular the year-over-year gains in the cost of health care, housing and clothing. Pearl Kamer, chief economist at the Long Island Association, raised the specter of "stagflation," where retail prices rise but growth in jobs and wages is anemic. The phenomenon last occurred in the 1970s.

"Inflation appears to be taking hold," she said. "I don't think you can say that it's isolated to food and energy."

Excluding these commodities, the regional price index rose 1.8 percent in the past year, led by clothing, up 4 percent, and health care, up 3 percent.

Nationally, inflation climbed 3.6 percent last month from 2010 and 1.6 percent if food and energy are excluded. The latter measure, called core inflation, is a key number closely monitored by the Federal Reserve Bank's interest-rate-setting committee.

Separately, the state Taxation and Finance Department released data on Friday about shopping activity on Long Island. June sales-tax receipts grew 1 percent in both Nassau and Suffolk counties from a year earlier. However, the gains are modest compared with those of early 2010.