Compared to the US as a whole, price increases in the Twin Cities continued to moderate at a faster rate over the past month.
The consumer price index, a commonly used measure of inflation, fell to 5.1% year over year for the Minneapolis-St. Paul Region, according to data released Tuesday by the Bureau of Labor Statistics. That’s down from 5.3% in November.
In comparison, the price index for the US increased by 6.4% over the course of the year. That was down from 6.5% in December and 7.1% in November and was the seventh straight year-on-year slowdown.
Regional data is released every two months while US numbers are released monthly. Of the dozen metro areas for which the federal government reported inflation data Tuesday, the Twin Cities had the second-smallest year-over-year increase, with the Washington, DC area registering the lowest at 4.4%.
“We’ve seen slower inflation growth in both Minneapolis and the Midwest, especially compared to the South and West,” said Tyler Schipper, associate professor of economics at the University of St. Thomas.
He pointed out that housing is a big reason, as housing costs (including rent) are rising more sharply nationwide and are a larger contributor to US headline inflation.
Over the past 12 months, grocery prices in the twin cities rose 12.2%, with items like cereal and baked goods rising 17%. Meanwhile, energy prices rose 7.6%, mainly due to an increase in natural gas prices. All other items except for these two categories were up 3.8% for the year.
Used car and truck prices were one of the few categories to see a 12.4% decline over the year.
A notable price increase nationally has been the price of eggs, which has soared 8.5% in January and 70% over the past year, reflecting an avian flu epidemic and higher feed prices.
Jervis and Catherine White, who run Papa J’s Kitchen and Goods from their Newport home, have noticed that food prices are going both ways.
“We look at inflation from both sides,” he said. “From a wholesale perspective, we’ve noticed that prices have come down tremendously.”
Wholesale chicken wings fell from $3 to $2 a pound, but retail prices at Walmart and Sam’s Club are still around $4 a pound, White said.
With most store prices still high, whites who have three children avoid $8 bacon and $4 eggs. They also stopped buying expensive granola bars for their kids’ school snacks. Instead, it’s pretzels or crackers. “That’s how we handle it. You have to be careful,” he said.
Ramona Wilson also hasn’t seen a drop in in-store grocery prices, but has seen a drop in gas prices. “This is great for those of us who commute to work,” she said.
Wilson, a director at Knutson Construction, said the idea of inflation is sometimes relative.
“I hear people complaining about housing interest rates,” she said. “And then I tell them that when we bought it in 1984, our interest rate was 13%. So the 6% to 7% they complain about is not comparable.”
Inflation remains high both locally and nationally. The Federal Reserve’s goal is to bring it back down to 2%.
Inflation began accelerating last year at the fastest rate in four decades amid supply chain shortages and higher demand for some products and services as the economy recovered from the pandemic. The CPI reached new highs of 9.1% for the US and 8.7% for the Twin Cities last summer.
While US prices have softened on a yearly basis, they accelerated 0.5% on a monthly basis from December to January, which is higher than the 0.1% increase from November to December. Higher gas prices, groceries and clothing helped push last month’s number higher.
So while the latest data suggests inflation is still trending down, it also shows that it may be stubborn and not declining as quickly as some hope, Schipper said.
“This will dispel some people’s notion that inflation will just magically go away,” he said. “It’s going to depend and it might require the Federal Reserve to do a little bit more.”
Fed Chair Jerome Powell said last week that the process to bring inflation down has begun.
But “this process will likely take some time,” he added. “We don’t think it’s going to be smooth. It will probably be bumpy.”
The Fed aggressively raised interest rates last year to a 15-year high in a bid to contain raging inflation.
The Associated Press contributed to this report.