Inflation slowed on Long Island, in NY area in January

Consumer prices in the New York area, including on Long Island, rose in January at the slowest year-over-year pace since 2024, according to a new report.

Among the key drivers behind the lower growth rate was a decline in gasoline prices and a moderation of the cost of home energy and residential rent.

The federal Bureau of Labor Statistics reported Friday that its Consumer Price Index for the 25-county region covering parts of New York, New Jersey and Pennsylvania climbed 2.9% in January compared with a year earlier. That year-over-year increase was lower than December’s 3.4% and November’s 3%.

The last time consumer prices were up 2.9% was February 2024. The index is a key measure of inflation.

Last month, gasoline prices were down 4.7% compared with January 2025. The cost of electricity, natural gas, heating oil and other home energy climbed 2.7%, or less than half of December's rate of 6.1%

Residential rents were up 3.9%, or about one percentage point below the rate in previous months.

"It's one month of good news driven largely by the results for energy," said economist John A. Rizzo, a Stony Brook University professor, referring to the January price index. "The absolute levels of prices remain high, and because of that, people aren't going to really feel this until we have a trend." 

In January, the cost of household furnishings and nonalcoholic beverages climbed 6.2% and 5.9%, respectively, year over year. Tuition for private school and day care was up 3.7% and the cost of new automobiles was up 0.8%.

Grocery prices rose 3.3% last month compared with January 2025 in part due to increases in the cost of fruits, vegetables, cereal and baked goods.

Rizzo and Steven Kent, chief economist for the Long Island Association business group, both attributed the 5.3% rise in the price of cereal and baked goods to tariffs imposed by the Trump administration on imported ingredients.

Year-over-year changes in cereal and bakery prices have ranged from a decline of 1.4% in January 2025 to rises of 6.6% in May and 5.4% in November.

"Tariffs may have played a role, and the producers are trying to pass that cost onto consumers," said Kent, who teaches economics at Molloy University.

Nationally, consumer prices increased 2.4% in January compared with a year earlier. That year-over-year increase was slower than December’s 2.7%.

Business executives, in recent national and local polls, have expressed concern that prolonged inflation will dampen consumer spending, which accounts for about 70% of economic activity.

More than half the executives in Nassau and Suffolk counties predicted consumer prices would continue increasing this year, according to a poll of 120 business leaders conducted between Oct. 1 and Dec. 1 by Citrin Cooperman accountants and Adelphi University for the HIA-LI trade group.

More than 9 in 10 of the executives said they don't expect consumer prices to return to pre-pandemic levels, based on the poll results.

Friday's release of the consumer price index for January isn't likely to lead the Federal Reserve to lower interest rates.

"This will keep the central bank on hold until June," said Bernard Yaros, lead economist at the consulting firm Oxford Economics.