Valley consumer prices higher than U.S. average - East Valley Tribune: News

Valley consumer prices higher than U.S. average

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Posted: Wednesday, February 20, 2008 4:40 pm | Updated: 11:59 pm, Fri Oct 7, 2011.

Grocery prices in Maricopa and Pinal counties shot up more than 7 percent in 2007, according to a U.S. Department of Labor report released Wednesday.

"That's a high number, and it has risen more ... in the West than it has in the past," said Richard J. Holden, regional commissioner of the Bureau of Labor Statistics, the record keepers for the department.

Several factors are fueling the 7.1 percent increase in grocery prices.

"Some of the cropland has been taken over from food production to energy production," Holden said.

That means higher prices for everything from meat and dairy - because cattle eat corn - to corn flakes and pancake syrup.

"Anything that has to do with the corn trickles down to other areas," said David J. Livingston, a grocery store analyst based in Wisconsin.

"The other thing is the value of the dollar has fallen,"Holden said. That means food is more expensive to import from other countries.

Finally, high oil prices mean grocery stores, which are supplied by trucks, are paying more in transportation costs.

But experts say food prices are typically erratic and fluctuations usually aren't taken very seriously when gauging overall inflation.

"It is relatively high, but grocery prices are highly volatile so I wouldn't make too much of it," said Tom Rex, an economist with Arizona State University's W.P. Carey School of Business.

Consumer prices in the Valley outpaced the nation's average in 2007, according to the report. Prices rose 3.4 percent here while the national average was 2.8 percent.

Food price increases followed similar trends in everything from restaurant prices to the cost of telephone service in the Valley.

Government officials blame higher housing costs as the prime culprit behind the overall increase.

Researchers take three components into account when assessing housing costs: shelter costs such as rent, energy costs, and the cost of furnishing and maintaining a home. "As people either decide to sell their houses or are no longer able to buy houses ... they create an additional demand on rental housing which tends to push the price up," Holden said.

Experts say they're not alarmed by the increase, which is following a four-year upward trend in the Valley."They do go up over time, and so 3.4 percent is not an unreasonable amount," Holden said. He noted that when volatile categories like food and energy are removed, Valley residents only saw a 2.8 percent rise in so-called "core inflation."

Core inflation is a more accurate barometer in how prices are trending over time, said Tracy Clark, an economist at Arizona State University.

"That sounds right in line," he said.

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