Good news for your budget: Economists predict a rapid drop in inflation for Hawaii next year

Residents say inflation is changing their spending habits.
Published: Dec. 20, 2022 at 4:07 PM HST|Updated: Dec. 20, 2022 at 4:55 PM HST
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HONOLULU (HawaiiNewsNow) - Inflation is still a major worry in Hawaii, where rising prices are putting the squeeze on families already living paycheck to paycheck.

But there’s some good news.

Economists are predicting inflation should fall rapidly here ― back to normal in less than a year.

Carl Bonham, of the University of Hawaii Economic Research Organization, said the global war on recession is already having traction in the islands.

“This week, we saw big, big moves on inflation,” Bonham said, “We’re sort of optimistic. We saw inflation come down quite a bit more than expected.”

Residents say inflation is changing their spending habits.

Resident Shannon Kobuke said inflation has mostly led to caution.

“We’ve been going to Sam’s Club and Costco a lot more and eating at home, not out so much,” she said.

Susan Tracy, who recently retired and now lives with her mother, is more worried about future prices.

“Hopefully, it stabilizes you know,” she said. “I know it’s all cost and demand and depending on what it is.”

Bonham said falling energy prices will be a big part of the slowing inflation rate in the islands.

“In Hawaii, we haven’t seen gasoline prices come down that much yet,” Bonham said. “Our gas prices have fallen maybe 10%. On the mainland, they fell 50%. And, you know, while our prices may lag, they do catch up and our gas prices will continue to come down, and our electricity prices will come down because of oil.”

Bonham said world prices of oil are now close to what they were before the Ukraine war.

UHERO forecasts inflation will fall from 5.8% last month to 2.75% by the second quarter of next year.

And before the end of 2023, it should settle at a very tolerable 2.5% percent and could keep falling.

“So as those transient components fall, you could easily have several months where the headline number for inflation is zero, or even negative,” Bonham said.

To Kobuke, that sounds too good to be true.

“I probably don’t really believe that,” she laughed.