DC Area Inflation: Residents See Biggest Jump In Costs Since 1990

VIRGINIA/DC — The cost last month of rent, food, cars and energy skyrocketed 7.5 percent year over year, a level of inflation Americans have not seen in 40 years, the U.S. government reported.

The consumer price index, which measures the cost of core goods, climbed 7.5 percent in January over the year before, according to the U.S. Bureau of Labor Statistics.

For the Washington, D.C. area, which includes Northern Virginia, the consumer price index increased by 6 percent, lower than the national average but the largest year-over-year increase since November 1990.

The food index increased 6.7 percent over the year, representing the highest 12-month rise in the D.C. area since May 2004, according to the BLS.

The cost of clothing in the D.C. area increased by 6.6 percent compared to January 2021, while regional housing costs rose 3.5 percent.

In the D.C. area, the cost of electricity in the home increased by 4.7 percent over January 2021. Natural gas prices for home heating jumped by 25.9 percent compared to a year ago due to a slight rebound in demand from earlier in the pandemic and a ripple effect from higher natural gas prices in Europe.

"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 nationwide, 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.

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.

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