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DENVER (KDVR) — State economists say inflation will be here to stay for the year.

The Governor’s Office of State Planning and Budgeting released its quarterly report on Thursday, detailing the state’s whole economic picture from inflation to employment to state budget. The report says inflation will peak in 2022 and will not level back to the pre-pandemic rates until 2023.

The Denver metro’s inflation was worse than the nation’s. State economists say this is because of Colorado’s skyrocketing housing and rent pricing. Inflation, they said, has yet to peak.

“For January, Denver inflation growth exceeded the nation with 7.9 percent inflation over the last 12 months compared with 7.5 percent nationally for the same period,” reads the report. “Denver core inflation also exceeded the nation, 7.0 versus 6.0 percent, as shelter and supply-chain-constrained goods inflation all outpaced the nation. Given continued U.S. price acceleration reported in February, Denver prices are also expected to grow faster in the next release, out in April.”

The high inflation has erased the wage growth seen nationally and locally. Year-over-year, wages grew 5%. While they have grown at record rates, they are in the lower-wage industries. They have created a spiral wherein businesses must pass the costs of higher wages on to consumers.

“The year-over-year percent change in the ECI in 2021 was historically high, coming in at 5.0
percent at the end of the year,” reads the report. “OSPB expects wage growth to remain high but revert towards normal growth by the end of 2022, as the Federal Reserve policy actions begin to lower labor demand, though not enough to converge with supply.”