NY Inflation: 40-Year-High Spike Costs New Yorkers Thousands

NEW YORK STATE — If it seems like you've been paying more for just about everything recently, it's because you have been. The cost of everything in the New York area jumped 5.1 percent over the same time last year, according to reports from the federal government.

Nationally, the consumer price index, which measures the cost of core goods, climbed 7.5 percent in January over the year before, the U.S. Bureau of Labor Statistics reported. The sting wasn't quite as bad in New York.

But the jump confirmed what everyday Americans already knew: prices on everything from airfares to orange juice were going up faster than wages.

New York hosing prices were already at record highs before inflation started to make things worse. According to the New York State Association of Realtors, housing prices statewide jumped 19.4 percent from 2020 to 2021. And Long Island saw home prices hit record highs.

The price spikes were seen across sectors, not just for items directly affected by the pandemic. Electricity prices surged 28.2 percent from December to January alone, and were up 20.2 percent from a year earlier. Last month, household furniture and supplies rose 0.4 percent over December, but jumped 7.3 percent since last year.

Food costs, driven by pricier eggs, cereal and dairy products, increased 7.1 percent since last January. New car prices, which jumped during the pandemic because of a shortage of computer chips, were up 14.6 percent over a year ago. The surge in new car prices accelerated prices for used cars: They rose 1.5 percent in January over December and were up a dizzying 41.6 percent over a year ago.

Getting around is also more expensive. Fuel costs for cars rose a staggering 39.5 percent since last year, although prices have dropped slightly from December to January. The prices of clothes stayed stable for most of the year, but jumped 6 percent from December to January.

"Just as price pressures in some areas ease, inflation in other parts of the economy" picked up, said Sarah House, an economist at Wells Fargo. "The upshot is that inflation is likely to remain uncomfortably high."

Overall, the consumer price index jumped 0.6 percent from December, a spike expected to weigh heavily with the Federal Reserve as it mulled adjusting interest rates. The Federal Reserve has signaled that it will increase the cost to borrow by raising interest rates in a bid to tamp down inflation.

Wages were rising, too, but the historic rate of inflation hit wage earners particularly hard because paychecks weren't keeping up. Wages rose at the fastest pace in at least 20 years, which can pressure companies to raise prices to cover higher labor costs.

Inflation-adjusted average hourly earnings fell 1.7 percent year-over-year in January — part of a 10-month straight decline, Bloomberg reported.

Shortages of supplies and workers, heavy doses of federal aid, ultralow interest rates and increased demand for goods were largely to blame for the increased prices. There were few signs that increases will slow significantly anytime soon.

Ports and warehouses were overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation's busiest, out sick last month. Many products and parts remained in short supply as a result.

The steady rise in prices left many Americans less able to afford food, gas, rent, child care and other necessities. More broadly, inflation emerged as the biggest risk factor for the economy and a serious threat to President Joe Biden and congressional Democrats as midterm elections loom later this year.

In the past year, sharp increases in the costs of gas, food, autos and furniture upended many other Americans' budgets. In December, economists at the University of Pennsylvania's Wharton School estimated that the average household had to spend $3,500 more than in 2020 to buy an identical basket of goods and services.

Many large corporations, in conference calls with investors, said they expected supply shortages to persist until at least the second half of the year. Companies from Chipotle to Levi Strauss & Co. also warned that they will likely raise prices again this year after having done so in 2021.

Chipotle said it increased menu prices 10 percent to offset the rising costs of beef and transportation as well as higher employee wages. And the restaurant chain said it will consider further price increases if inflation keeps rising.

"We keep thinking that beef is going to level up and then go down, and it just hasn't happened yet," said John Hartung, the company's chief financial officer.

Executives at Starbucks and other consumer-facing companies said their customers so far don't seem fazed by the higher prices.

Levi Strauss & Co. raised prices last year by roughly 7 percent above 2019 levels because of rising costs, including labor. It plans to do so again this year. Even so, the San Francisco-based company upgraded its sales forecasts for 2022.

"Right now, every signal we're seeing is positive," CEO Chip Bergh told analysts.

The Associated Press and Patch Editor Paige Austin contributed to this report.