Honolulu is seeing the nation’s highest rate of inflation, according to the latest Consumer Price Index figures from the U.S. Department of Labor. The index shows the cost of living in Honolulu jumped by 5.8 percent in the first half of 2006 compared to the same period last year, surpassing Miami’s 5.7 percent and Los Angeles’ 5.1 percent. Rising costs related to housing, transportation, and energy accounted for most of the increase. Housing costs alone rose 8.5 percent versus the first half of 2005. Department of Labor spokesman Charlotte Yee told the Star-Bulletin that excluding housing numbers, Honolulu’s inflation rate would be 4.2 percent, below the national average. Yee pointed out, though, that the cost of living is definitely rising faster than Hawaii wages, which increased by only 2.8 percent between 2004 and 2005. The news comes as Hawaii’s strong economy is already being tempered by a tight labor market and significant increases in the costs of doing business. In an interview with the Honolulu Advertiser, Bank of Hawaii economist Paul Brewbaker said, “This is bad news… We’re running as fast as we can to stay in the same place.” While more recent figures show inflation is slowing, Hawaii’s final inflation rate for 2006 may still surpass last year’s 3.8 percent a 13-year high. Local inflation hit its lowest point in 1996, where the rate dipped below one percent.
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