California residents grapple with higher prices despite inflation dip

SACRAMENTO, the United States, March 6 (Xinhua) -- Californians are feeling the pinch of inflation more than most Americans, with higher prices for goods and services compared to pre-pandemic levels, local media reported Wednesday.

Even though overall inflation has tapered off from its mid-2022 peak, the state's residents are still facing price hikes that outpace wage growth, said Calmatters, a leading non-profit and non-partisan news website on local politics and policy.

A recent analysis by the California Legislative Analyst's Office (LAO) based on consumer price index data showed that California's core inflation remains above pre-pandemic average, and overall prices in the state had jumped 20 percent since 2020, with energy leading the surge.

In January 2024, energy prices were a staggering 27.7 percent higher compared to the same time in 2020. Food prices haven't fared much better, climbing 25.5 percent over the same period.

California's notorious gas prices, already some of the highest in the nation, are poised to climb even further. The average price for a gallon of gas in the state sits at 4.86 U.S. dollars on Wednesday, compared to the national average of 3.39 dollars, according to data from the American Automobile Association.

A proposed overhaul of the state's low-carbon fuel standard, intended to meet ambitious climate goals, could add another 50 cents per gallon to the pump price over the next two years.

The state air quality regulator California Air Resources Board's financial impact analysis projects a significant rise in gas prices, with a potential increase of 47 cents per gallon next year, followed by a 52-cent jump in 2026.

This burden will fall disproportionately on low-income communities, as the analysis pointed out. These communities typically spend a larger share of their income on transportation, making gas price hikes especially painful.

While nationwide inflation seems to be moderating, with price hikes primarily in services like rent, medical care and auto insurance, California continues to see inflation for both goods and services, according to data from the Bureau of Labor Statistics.

Some California residents are struggling to get affordable auto insurance, with premiums rising 17.7 percent from 2023 to 2024, according to Bankrate.com.

Housing costs in the state had historically been higher than the national average, and recent years had seen substantial growth, with some areas experiencing record price surges, said the LAO's housing affordability tracker in January.

The tracker showed that monthly payments for a newly purchased mid-tier home surpassed 5,500 dollars per month in December 2023, a staggering 80 percent increase since January 2020.

The combined effect of rising home prices and mortgage rates has made homeownership a distant dream for many Californians.

Renters are not spared either. California's median rent sits at 2,755 dollars this month, 38 percent higher than the national median, according to real-estate listings company Zillow.

Californians' wages, unfortunately, have not kept pace with inflation. While a 15-percent wage increase since before the pandemic might seem positive on paper, it is eclipsed by inflation, resulting in a net decrease in purchasing power. This is particularly concerning for low- and middle-income families.

A recent analysis by the Public Policy Institute of California showed that average hourly wages for private sector workers had grown by 15 percent since January 2020. However, after adjusting for inflation, real wages had decreased by 2 percent.

This trend holds true for major sectors like education, healthcare, professional services, manufacturing and financial services. Inflation has eaten away at wage growth for these sectors, said the analysis.