It’s a mixed bag. Inflation on Oʻahu ticked up very slightly in May and was higher than the nationwide rate, but continued an overall decline.

At the same time, Honolulu had the 6th worst inflation problem of the 23 metropolitan areas tracked by the federal Bureau of Labor Statistics, according to a new report from Wallet Hub, an online personal finance company — although a Hawaiʻi economist questioned the findings.

The Consumer Price Index rose 2.7% in Honolulu in May — figures are not released for the state as a whole — versus 2.4% across the U.S., according to data released last week by the Bureau.

Inflation on the island last month was 2.5%. But last May it was twice that and this January it was 3.5%.  

“Honolulu is trending downward, but it still ranks pretty high (among metro areas with inflation problems) because the numbers were so high a year ago,” said Chip Lupo, a Wallet Hub analyst.

Typically, inflation trends on neighbor islands follow Oʻahu’s.

Rise in Gas, Housing Costs Slowed

The May increase locally was pushed largely by increasing food and clothing costs. The cost of food bought at grocery stores and eaten at home rose 6% in May, nearly three times the national rate. The price of clothing rose 8.2%, compared to 5.2% in April. 

It’s hard to pin down reasons both for those increases and for the difference with the U.S., because federal data only breaks out inflation for particular food products, for example, on a national level, said University of Hawaiʻi economist Carl Bonham.

One possibility is that the impact of tariffs might have started to show up in both sectors, he said, referring to taxes President Donald Trump has imposed on many imported goods.

It’s not the only open question, said Bonham, executive director of the University of Hawaiʻi Economic Research Organization.

“Hawaii’s economy still is not growing as fast as the U.S. economy. So having our inflation rate above the U.S. is a little bit of a puzzle,” he said.

It’s possible, Bonham said, that the difference between the Honolulu rate and the nation’s is statistically insignificant.

“Because these are statistics that are measured from samples, they have bias, they have error. And it’s not clear that 2.7 in Honolulu is statistically different from 2.4 in the nation as a whole,” he said.

Among downward pressures, the rise in the cost of rent continued to slow and fuel prices on Oʻahu continued to fall — which tamped down the inflation numbers.

Hawaiʻi Rate Isn’t Always Higher

While prices in Hawaiʻi are on average higher than the rest of the country — a 2023 study from the U.S. Department of Agriculture found average grocery costs were 52% higher in Honolulu than on the U.S. mainland — that doesn’t mean that inflation is always higher here. 

If, for example, Hawaii’s economy is humming – and a shortage of workers leads to upward pressure on wages – inflation in the state could be higher than nationwide, Bonham said.

However, local inflation often trails the nation’s if Hawaiʻi’s economy is stagnant – as in, say, the mid-1990s, when the real estate market slumped and tourism declined sharply, among other reasons.

But UHERO has forecast that Trump’s tariffs will push inflation rates to 4% this year and in 2026. If immigration policies constrict the labor force in areas ranging from agriculture to construction to tourism, that also may force inflation up, Bonham said.

Inflation has dropped sharply nationwide since May 2022, when it hit 8.6%, the highest level since 1981 — as the Federal Reserve made repeated interest rate cuts. Honolulu’s inflation rate peaked in 2022 at 7.5%

Is It Really That Bad?

To find each metropolitan area’s ranking, Wallet Hub averaged the inflation rate of March and that of last May, giving each equal weight to account for price shocks from factors such as tariffs, oil prices or global events such as war, Lupo said.

The cities with worse inflation problems than Honolulu were Boston, St.  Louis, Baltimore, San Diego and Denver, the report said.

But Bonham said that the smaller the sample area — for example, a single metropolitan area — the greater the standard margin of error would be.

When it comes to the report, he said, “It is probably true that Honolulu inflation is statistically higher than the bottom two or three metros in the Wallet Hub report but probably not from the other metros.”

“Data Dive” is supported in part by the Will J. Reid Foundation.