Rising food, energy and housing prices are creating even tighter pressure in Dallas-Fort Worth.
The region’s inflation rate stood at 9% in March – the largest year-on-year increase since December 1981. That compares with a US rate of 8.5%, which is also a four-decade high.
North Texas prices rose 1.2 percentage points from January, when the Bureau of Labor Statistics released its latest D-FW Consumer Price Index report. The BLS began tracking regional data in 1963, and D-FW recorded its highest inflation rate in April 1980 at 19%. The region experienced double-digit inflation from February 1979 to October 1981.
The March spike in D-FW was driven by double-digit increases in the costs of housing, groceries, electricity and gas, and used car prices relative to the same month a year ago. These are the notoriously volatile components of the consumer price index.
Over the weekend, gasoline prices fell to $3.46 in parts of North Texas. As of Tuesday, according to Gas Buddy’s fuel tracker, Texans were paying an average of $3.69 a gallon for unleaded gasoline, the fourth-lowest price in the nation.
March was the first full month where the consumer price index captured the effects of the Russian-Ukrainian war on oil prices. Gasoline prices have climbed 48% over the past 12 months, according to the BLS.
Prices for natural gas, especially consumer gas and utilities used in homes, tend to be somewhat less volatile than gasoline, said Julie Percival, regional economist for the BLS in Dallas.
“Utility companies are a kind of brokerage that costs you money,” Percival said. “Some of them are still regulated, not by the state of Texas, but by the other states in our reporting area. They still have a lot of their public services, run by government organizations, public service organizations. We may be seeing less volatility for the consumer because of that.
Albertsons, which also operates Tom Thumb and Market Street stores in North Texas, said on Tuesday its profit margin narrowed due to rising fuel costs. Excluding fuel, the grocer said its costs were flat, but only after productivity and improved margins at pharmacies related to COVID-19 vaccines offset rising product and supply chain costs.
D-FW prices in the broader food category jumped 9.8% for the 12-month period. Individual items such as meat, poultry, fish and eggs increased by 22%, while fruits and vegetables increased by 13.5%. Conagra Brands Inc., a Chicago-based food company, estimated meat prices rose 50% over a 12-month period, according to trade publication Meat+Poultry.
Grocery prices have been rising steadily since April 2021, according to market research firm Numerator. He noted that price increases at dollar stores nearly doubled other retail channels.
Annual inflation is well above the Federal Reserve’s 2% target. Bloomberg analysts have announced that the Fed is expected to raise interest rates by half a point in May.
“While we expect to see things like used cars and trucks start to take off, it’s really those core CPI drivers that are more persistent drivers of inflation,” said Brett Ryan, senior US economist at Deutsche Bank AG in a Bloomberg report. “And once they’re started, they tend to last.”
Whether you’re buying a new or used vehicle, D-FW sees “mild” price deflation, Percival said. Prices for used cars and trucks remain up 34% year over year, but fell nearly 1% from January. New vehicles are up more than 5% year over year.
“I’ve heard people I know say they’ve kind of given up on looking for a used car. They change their minds and say, “Used cars are so expensive, I might as well buy a new car,” Percival said.
Overall, housing costs were up 7.9% year over year in D-FW. March is usually when the inventory of homes for sale increases for the spring and summer, but instead the local market saw its first drop in sales in 2022.
The median sale price in North Texas has increased 22% since March 2021, from $311,500 to $380,000. Since March 2020, the median has increased by more than 40%, from $270,000.
D-FW’s real estate landscape is a “complex environment,” Percival said, with population growth fueling housing demand.
“It’s like what you see in any type of market,” Percival said. “The price increases with demand. And once the price increases, the demand begins to stabilize.
Tenants are also feeling the pinch, with rents up 7% from a year ago.
In the first months of 2022, apartment hunters find few options and higher prices. The Dallas-Fort Worth apartment vacancy rate fell to less than 3% in the first three months of the year. And demand for local rental units has outpaced new apartment completions, according to the latest data from Richardson-based RealPage.
Inflation concerns also took precedence over small business labor concerns.
According to the National Federation of Independent Business quarterly survey, 31% of business owners cited inflation as the most important issue.
“With inflation, a continued labor shortage and supply chain disruptions, small business owners remain pessimistic about their future business conditions,” said NFIB Chief Economist Bill Dunkelberg.
Wages are not keeping up with inflation, creating a “big disconnect in the economy,” Percival said. The Labor Department says that after adjusting for higher consumer prices, hourly earnings for private sector employees fell 2.7% in March from a year earlier, the 12th consecutive decline in this guy.
“Prices can go up pretty high, but wages don’t necessarily keep pace,” Percival said.
There is a slight silver lining to the March data. Price increases for some consumer items are beginning to decline, possibly signaling a spike in inflation.
“It’s better than nothing,” Percival said. “I find that to be kind of an encouraging sign, at least in terms of price changes.”
Information from Bloomberg and The Associated Press has been included in this story.
Writer Maria Halkias also contributed to this story.