Inflation has slowed, yes it has |

Inflation has slowed, yes it has

Tamara Chuang
The Colorado Sun
Sun inflation chart January 2023

Inflation has slowed since March. Did you notice? Possibly not, because by the end of 2022, the Denver area posted its highest annual inflation rate in decades, at 8%, which was the same as the nation’s, according to the latest Bureau of Labor Statistics data.

In Colorado, the economy curved a little differently. The Denver metro area —  the only Colorado locale where the, apparently, under budgeted BLS tracks consumer prices — swelled to a 9.1% inflation rate in March, months before the U.S. followed in June. By November, Denver was at 6.9% while the U.S. rate slowed to 6.5% in December (the BLS also only measures the Denver-Aurora-Lakewood metro area every other month).

But it continued to be a rough year for consumers since “slowing” still meant prices were higher than a year ago. And inflation is still high. The last time the annual inflation rate was above 6% in the U.S. was 1982. Some recent price hikes seemed to hit Colorado particularly hard. 

Energy bills spiked in 2022, causing the state’s Office of the Utility Consumer Advocate to call Xcel Energy’s rate increases “frightening.” Gasoline prices are up again as well. A gallon of regular gas averaged $3.25 in Colorado on Friday, or 18 cents more than a week ago, according to AAA’s gas-price tracker. Nationwide, a gallon dropped a penny from last week to $3.29 on Friday.  

Then there’s the egg shortage, primarily blamed on avian flu that wiped out Colorado’s 6 million egg-laying commercial chicken population last year. Farms are rebuilding their flocks but by December, the price of a dozen eggs more than doubled in a year to $4.25 nationwide. While not solely to blame for egg inflation, the virus contributed to higher prices and shortages that continued this week. A dozen ordinary large white eggs at King Soopers cost $5.49 on Friday — if you could find them.

Eggs, gas and energy are regular purchases many consumers make each month. They’re all part of “the basket” of household goods measured by the Consumer Price Index. Any change to CPI is how inflation is calculated. And while Coloradans may face higher prices for what’s in their basket, some local economists forecast higher inflation will exist but continue slowing in 2023 because shoppers are changing their behavior.

“It’s the substitution effect so when you can’t get your hands on eggs, like what’s happened over the last couple of weeks, we just use something else,” said Brian Lewandowski, executive director of the Business Research Division at Leeds School of Business at the University of Colorado Boulder. “If you’re eating eggs for breakfast, what else can we eat instead? You have a lot of other things that you can eat for breakfast instead.”

Natural gas costs, meanwhile, doubled and tripled last year, depending on the source. Several factors are to blame, including a drop in drilling new wells in the pandemic, the war in Ukraine limiting supply, and the U.S. becoming the world’s largest exporter. But natural gas, too, is only a small part of the basket, Lewandowski said.

“Again, it’s a relatively small overall piece of our basket of goods and services but it’s increasing at a fast rate,” he said. 

Higher prices and slower inflation can coexist if items are a smaller part of the basket. It’s shelter and transportation that take the biggest chunk out of household expenses. Raising interest rates, as the Federal Reserve did seven times last year, put a chill on the housing market to curb inflation. For December, housing costs increased 7.5% from a year ago, while overall transportation costs were up 3.7% in the West region

Of course, prices were already starting to climb in late 2021 as pandemic recovery was still underway. Stimulus checks and pandemic unemployment had run out. Employers were raising wages to address labor shortages. The cost to live in our economy was already higher as 2022 began, pointed out Gary Horvath, a Colorado economist based in Broomfield. By the end of 2021, the U.S. and Denver  inflation rates were already over 7%.  

“We’ve created a big problem here,” Horvath said. “We’re talking about a roughly 6.5% increase (in December) based on prices that had a significant increase a year ago. We’re getting double dipped and that’s why it seems so painful.”

He’s often been surprised at the strength of the Colorado job market and is hopeful that this season’s bountiful snowfall will boost many Colorado industries through summer. But he doesn’t think inflation will start falling until 2024. There’s still too much uncertainty with the war on Ukraine, avian flu and other factors. 

“In the short term I am concerned because inflation on many food items increased during the second half of the year. While the overall rate declined, everyone has to eat,” Horvath said. “High food prices combined with high energy bills will be a problem for some families.”

Tamara Chuang writes about businesses, technology and the local economy for The Colorado Sun. She also writes the “What’s Working” column, available as a free newsletter at