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Updated Friday, November 16, 2012 at 06:49 AM

Seattle-area inflation rate slows

By Drew DeSilver
Seattle Times business reporter

Inflation in the Seattle area moderated last month, due mainly to lower prices for food and household energy, the federal government reported Thursday.

Local consumer prices were 2.31 percent higher in October than a year earlier, according to the Bureau of Labor Statistics’ bimonthly report. That was down from 2.74 percent in August.

But local inflation still was running faster than the national rate, which was 2.16 percent last month. Seattle-area inflation has run ahead of the nation as a whole since April.

Household electricity fell 1.3 percent locally from August to October, the bureau said, and natural-gas prices rose just 0.1 percent in that two-month period. Grocery prices were down 0.3 percent.

But gasoline prices jumped 4 percent between August and October, and stood 6 percent above their level in October 2011.

Residential rents in the area were up 3 percent from a year ago, and owners’ equivalent rent (a surrogate for home prices) were 2.5 percent higher. Apparel prices were up 5.3 percent in the past two months.

During the past 12 months, the national inflation rate is only slightly above the Federal Reserve’s inflation target of 2 percent.

“Inflationary pressures at the consumer level are modest,” Steven Wood, an economist at Insight Economics, said in a note to clients.

Mild inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation also makes it easier for the Fed to continue with its efforts to rekindle the economy. If the Fed worried that prices are rising too fast, it might have to raise interest rates.

Nationally, the price of many food commodities is up. The price of milk increased 0.9 percent last month, the most in more than a year. Cheese costs jumped 1 percent. Prices for bread, cereals, meat and chicken also increased.

The increases suggest this summer’s drought is starting to drive up prices at supermarkets and grocery stores. The drought damaged corn, soybeans and other crops.

Corn and soybeans are used in animal feed, which pushes up the price of beef, chicken and pork. Corn is also used in many products found throughout the supermarket, from cereals to soft drinks to cosmetics.

Information from The Associated Press is included in this report.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com


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