Just as gas prices seemed to be easing, new economic data out Wednesday reminds us of what happened last month: The price of a lot of stuff increased. May’s inflation rate grew to 5% in metro Denver from a year ago, according to the latest U.S. Bureau of Labor Statistics report.
The region’s one-year change in the consumer price index hasn’t been that high since September 2023, when consumer price growth was slowing from the decades-high 9.1% in spring 2022. The biggest increases were seen in energy costs, which have risen 15% since March, BLS Acting Regional Commissioner Jerome Watters noted in a news release. As part of the energy index, Denver-area gasoline prices were up 24.3% in the same two months, and up 41.8% compared with a year ago.
Similarly, U.S. prices are up 4.2% from a year ago, with energy prices up 23.5% in the same period. The national change in CPI for gasoline was a 40.5% increase.
The cost of food has also climbed, up 1.8% from a year ago. That’s due to a combination of eating out, up 2.9%, versus buying groceries and eating at home, which costs 1.1% more than a year ago in the Denver metro. Apparel and transportation costs grew double digits, up 13.9% and 10.8%, respectively, from a year ago.
Broomfield economist Gary Horvath said inflation isn’t evenly hitting all products or consumers. Gasoline, of course, is one area that has gone up especially after the war in Iran began in late February. In January, the Denver metro’s inflation rate was 2.6%.
“Some of the increases are a result of policies or decisions made by government officials. In those cases, their impact may be short term. Gasoline prices and the war in the Middle East are a perfect example. We will see if that theory is right when the data comes out again in two months,” Horvath said in an email. “To that point, with this being an election year, there is a good chance that inflation will decline in some areas (like gasoline) in the next couple of months.”
The U.S. launched new airstrikes against Iran Tuesday night after a U.S. Army helicopter collided with an Iranian drone near the Strait of Hormuz, where transporting oil has been at a near standstill for several months.
But while the average price for a gallon of regular gas in Colorado shot up 10 cents overnight to $4.27 on Wednesday, the national average did not. The U.S. price dropped a penny to $4.15 since, according to travel site AAA.
Anytime there’s a hint of positive or negative impact on the U.S. due to geopolitics, that’s likely to impact gas prices. But that’s not the only reason why gas prices go up or down, said Skyler McKinley, AAA’s regional director for Colorado.
If you can’t afford a house, it doesn’t matter if inflation goes up by 3% or 8%. You still can’t afford it.
— Jack Buffington, Daniels College of Business professor at the University of Denver
“There’s about a million different things that happen between oil coming out of the ground and gas going into your car. And some of that is international,” McKinley said. “But it can also be down to micro level where there’s fierce competition between service stations in a neighborhood. So when we see these regional variations, like 10 cents in a day in Colorado, I always caution against ascribing them to one of the broader trend lines.”
Colorado’s gas prices are about the same as they were a week ago, but 40% higher than a year ago. A gallon in the state is also about 45% higher than it was the week the Iran war began.
Drivers who are spending 30% to 45% more on every fill-up probably feel prices have gone up way more, said Jack Buffington, an associate professor at the Daniels College of Business at the University of Denver. While those who take public transportation and haven’t seen bus or rail prices increase, may not feel the same way.
“If you can’t afford a house, it doesn’t matter if inflation goes up by 3% or 8%. You still can’t afford it,” Buffington said. “Relative to everything that’s going on, people are surprised that inflation hasn’t gone up more.”
AAA doesn’t project where gas prices will be tomorrow, or for the summer. That would be pure speculation and anyone who does that “is either being foolhardy or lying to you,” McKinley said. So, the travel company can’t say whether it’s a good time to take a road trip.
However, he pointed out that in 2022 when gas prices were at record levels, AAA asked consumers about their travel plans. Travel behavior was “pretty resilient” and folks, despite higher gas prices, still planned to travel, and did so.
AAA’s recent Memorial Day forecast also found that an all-time high number of 45 million people were traveling, though some may be saving money by eating out less on the road or opting for cheaper hotels.
“That’s a bonkers number of travelers,” McKinley said. “There’s a tale of two economies and there always has been with travel. There are the folks who are able to take time away from work and have the discretionary income to travel. And there’s the folks who sort of need an economic miracle to happen. … So we are not seeing fewer people travel, we are seeing slower growth of the travel economy.”