New inflation stats confirm Southern California shoppers’ hunch — and fear — that the cost of living is heating up again.
The recent release of regional Consumer Price Indexes for September – a rare federal data release during the government shutdown – shows that inflation not only remains problematic, but is now surging at its fastest pace since May 2024.
Start with the 3.5% inflation rate for Los Angeles and Orange counties. That’s the biggest cost-of-living bump in 16 months and is up from a 3.3% gain for all of last year. Yes, it’s nowhere near as painful as the 4.9% average annual rate during the inflationary spikes of 2021-23.
A similar uptick was seen in the Inland Empire. Its price index increased at a 3.6% annual pace in September, also a 16-month high and up from 2.6% last year. The Inland CPI was surging at a 6.4% annual rate in 2021-23.
Southern California shoppers should be thrifty because help isn’t on the way. The Federal Reserve, the government’s inflation hawk, has turned its attention to a weak job market. That means more interest rate cuts to prop up hiring – financial stimulus that may further spur inflation.
Plus, even modest inflation has added sting when paychecks are stressed.
Wages increased by an average of 4.1% a year across Southern California in the second quarter, according to a federal pay index. It’s the smallest increase since 2020’s third quarter. Raises had averaged 5.1% over the past four-and-a-half years.
Reheated inflation is not just a regional pattern. Nationally, inflation was 3% in September, the highest since January.
The U.S. rate, however, was 3.2% last year. And don’t forget inflation averaged 5.5% nationally in 2021-23.
Disappearing discounts
These are confusing times.
The softer economy should trim demand for many consumer goods, cooling price hikes. But merchants are facing various pressures – from rising labor and operational costs to the contentious tariffs placed on imported goods by President Trump’s administration – and are passing some of those burdens on to their customers.
Ponder key spending areas and how inflation is percolating through them, using average price swings for the region’s two metropolitan areas. Some 2024 Southern California price cuts are hard to find this year.
Look at gasoline. Fillups cost 2.5% more in the year ending in September, due to higher crude oil prices and refinery outages. That’s a sharp change from a 5.5% decline for all of last year. At least fuel inflation isn’t averaging 18% annually, as it did in 2021-23.
And there’s apparel. Much of our clothing is imported, so tariffs on foreign-made goods are likely a price challenge. Local apparel is 5.1% pricier this year, after running flat in 2024 and an average 4.4% yearly increase in 2021-23.
Then look at car lots. Weak vehicle sales are keeping discounts modest for both new and used options.
Vehicle prices are down 0.3% in the year ending in September, but that’s not the 2.1% decline seen in 2024. Additionally, the hurt of 7.3% annual gains in 2021-23 hasn’t gone away.
Faster pace
Contemplate local purchases with faster inflation.
A trip to the market reminds you that grocery shopping still drains your wallet. Everything from rising transportation and labor costs to tariffs is a factor.
“Food at home” prices rose 2.1% year over year in September, triple the 0.7% increase last year. Plus, the 6.4% annual surge of 2021-23 is an ugly memory.
Also, getting someone to do something for you is pricier. Inflation for personal services rose 2.3% year over year in September, slightly above the 1.9% gain last year. And the 7.1%-a-year jumps of 2021-23 still sting.
Some hope
Inflation has slowed in certain slices of a household budget.
Start with housing, the largest expense. Rent hikes, by CPI math, are moderated by a growing number of empty units.
Local landlords’ 4.6% annual increase in September is a smidge below last year’s 4.7%. It’s also an improvement from 5.6%-a-year hikes in 2021-23.
And the rise of dining-out prices cools as restaurateurs face financially skittish diners. The 3.9% annual increase for September is down from 5.6% gains last year and 6.1% average jumps in 2021-23.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com