The latest inflation data for Oregon is now available, covering the second half of 2013. One interesting item to note is that while U.S. inflation remains very low (and falling), the Portland-Salem numbers picked up to end the year. The gap between the local and national figures is about as large as it has ever been. Oregon inflation closely follows national trends over the extended horizon, however these quirks and different movements do happen from time to time. Part of the reason is that local inflation exhibits some pro-cyclical movements, as does the state’s economy. That is, Oregon tends to grow more quickly than the average state in expansions and fall further in recessions. Moving forward, expectations are for these two series to converge again in terms of the longer run trajectories. Another potential reason for the diverge is simply small sample sizes for the local data relative to the nation, making our underlying series more volatile.
What follows are updates to our standard inflation graphs including a look at the underlying components of inflation (with updated weights!). This first set of graphs are for the CPI-U which covers all urban consumers — about 88% of the U.S. population.
Without further detailed information (which is not available) it is unknown precisely which portions are driving the divergence between Oregon and U.S. inflation figures. However at the larger component level, it is clearly Transportation (mostly car prices and gas prices), Food & Beverage (both at home and out to eat), Education & Communication (mostly tuition and home phone/internet prices) and Recreation (cable tv, admissions/fees, gyms). Another key factor is rising housing prices (both to buy and rent), which account for about 40 percent of the overall CPI, and are increasing faster in Oregon than nationwide.
CPI-W does not differ dramatically from CPI-U. They measure the same products for prices, but the relative weights between components is different due to different consumption patterns. As such, the broader trends shown above in CPI-U are evident in the CPI-W data as well.