Southern California inflation fell sharply in 2023 – but it’s not cured

Local inflation was more than halved last year, but a 3.5% gain in the Consumer Price Index remained above average.

My trusty spreadsheet looked at annual changes in the CPI for Los Angeles and Orange counties going back 40 years to give some local perspective on the much-debated cost of living and whether the economy’s latest inflation woes have been cured.

Last year’s inflation jump was only the 14th-largest increase since 1974, and was down sharply from the 7.4% surge in 2022. Still, it was above the 3% average over 40 years.

The Federal Reserve’s war on inflation – powered by interest-rate hikes – has modestly cooled the economy, and that chill has moderated price hikes. But the job clearly is not finished.

By the slice

Let’s look at price swings in some key local spending categories …

Rent: Up 5.5% last year – the No. 9 gain in 40 years – compared to a 4.4% increase in 2022 and 3.8% average gains since 1974. No matter the math, it’s tough to be a tenant.

Services: Up 5.1% last year – No. 9 – vs. 7.8% in 2022 and 3.6% gains since 1974. Labor shortages boost service-provider wages.

Groceries: Up 3.8% last year – No. 12 – vs. 10.7% in 2022 and 3% gains since 1974. Modest relief for a hard-to-avoid expense.

Dining out: Up 6.5% last year – biggest in 40 years – vs. 5.6% in 2022 and 3.1% gains since 1974. Restaurants also suffer wage-driven cost hikes.

Utilities: Up 8.4% last year – No. 9 – vs. 15.8% in 2022 and 3.8% gains since 1974. A host of challenges for supplies and delivery of electricity and natural gas.

Gasoline: Down 8.7% last year – No. 34 – vs. up 32% in 2022 and up 4.2% gains since 1974. Key ingredient – crude oil – got cheaper.

Durables (cars, furniture, appliances, etc.): Down 2.4% last year – No. 35 – vs. up 8.4% in 2022 and 0.1% gains since 1974. Normal supply chain conditions helped.

Apparel: Up 1.9% last year – No. 9 – vs. 6.7% in 2022 and 0.5% gains since 1974. Also helped by improved logistics.

Bottom line

Ponder the odd cost-of-living yardstick carefully watched by the Fed – inflation without food or energy. (What life exists without those staples?)

Nevertheless, these expenses were up 3.8% last year – the 11th biggest increase in 40 years. OK, that’s down from 5.8% in 2022. But it’s still above the 3% average since 1974.

Politely stated, not fixed yet.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com