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When Oahu residents open their electric bills in October, they could be in for the latest in a long series of unpleasant surprises. The average bill is expected to be up 4%, or about $9 per household – following a yearlong rise that already has people complaining.

Few things illustrate Oahu’s surging cost of living more strikingly than the cost of electricity. But the cost to power homes is hardly the only inescapable cost increase Hawaii residents face these days.

While the cost of electricity rose 34% in July compared to a year before, gasoline prices rose 36% compared with the same month a year ago, according to the most recent federal data released in August. Hawaii gas prices averaged $5.24 a gallon on Tuesday, AAA reported, compared with a national average of $3.75.

Those increases were in addition to double digit percentage increases in the price of groceries, which rose 11%.

“We know our customers are feeling financially challenged as inflation and high fuel costs continue to pressure household expenses,” Hawaiian Electric’s president and chief executive Scott Seu told Wall Street analysts during an . But, he said, there wasn’t much the company could do given rising oil prices and a state-mandated closing of Oahu’s only coal-burning power plant in September.

“Due to current high oil costs, we also expect a temporary increase in customer rates when the AES coal plant retires,” Seu said. Most people will see the effects on their , the company said.

Overall, food and energy costs helped push the cost of living up nearly 7%, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index for “Urban Hawaii,” which covers Honolulu. While that’s lower than the overall rate of 8.5% nationally, it’s still outpacing wage increases and putting more pressure on households already struggling to make it in Hawaii.

People could dip into savings or borrow but otherwise have few options for coping with the increases, says Carl Bonham, executive director of the University of Hawaii Economic Research Organization. “Other than downsizing your household and moving in with Auntie, there’s not much you can do,” he says.

‘Unfortunate Costs Of Reducing Inflation’

And things might only get worse, Bonham said, as the economy in Hawaii and the mainland slow down. Federal Reserve Chairman Jerome Powell over the summer signaled that the central bank was willing to dole out pain to households and businesses to get inflation under control.

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said, portending a series of interest rate increases that economists predict will continue after the Fed’s 0.75% point increase imposed earlier this month.

“These are the unfortunate costs of reducing inflation,” Powell said. “But a failure to restore price stability would mean far greater pain.”

So far, Bonham said, many household balance sheets remain strong, with people still in the black thanks to stimulus money doled out during the coronavirus pandemic. But as prices rise, federal money goes away, and people spend down savings, households will be forced to rely on credit cards charging higher interest rates – and to reduce spending.

“That’s sort of when things will really get dire,” he said. “It all hits the fan.”

Last week, Hawaii might avoid a full-fledged recession if Japanese tourists return in time to offset declines from mainland visitors. But Bonham said there’s a risk a weak Japanese yen will keep people from traveling.

Even if tourism remains strong, the university economists expect job growth to slow overall, as other industries weaken.

“The ongoing visitor industry recovery will support job gains in tourism related areas next year, while many other sectors experience weakness,” UHERO predicts. “Aggregate job growth will slow from more than 5% this year to 1.7% in 2023.”

Still, even for those with jobs, rising prices are putting a pinch on households in a place with notoriously high costs of living. Food banks are struggling with increased demand, and even with federal stimulus money, the pandemic weakened tens of thousands of households financially.

The Hawaii Budget and Policy Center last week pointed to new census data showing poverty in the state increased by 1.9% for individuals and 1.6% for families between 2019 and 2021. That means 28,000 more individuals and 6,400 more families were living in poverty in 2021 than 2019. Median incomes decreased by 3.6%, representing a loss of $3,200 in annual income.

“I would say for low-income and working families, it’s always been a critical time,” said Will White, . Now, they have rising prices on top of everything else.

“People are getting a double-whammy of sorts,” he said.

Bonham cautioned against putting too much weight on the latest information. The from the Census’ American Community Survey covers a relatively small time period, including 2020 and 2021, when government-mandated business closings and federal stimulus money were distorting the economy, Bonham said. He said data covering five years, due in December, will give a better indication.

White acknowledged the census data provides only a “snapshot in time,” but he said the numbers still show how the pandemic affected families – who are now struggling with spiking prices.

The impulse among political leaders is to cut taxes to ease costs on working people. Specifically, both major gubernatorial candidates, Lt. Gov. Josh Green and former Lt. Gov. Duke Aiona, have vowed to eliminate the state’s general excise tax on food. That would lower costs at the register by 4.5% on Oahu and 4% on neighbor islands.

But White notes such tax cuts, while popular, have costs.

“You’ve got to have a way to put that revenue back into the budget,” he said. Otherwise, he said, policymakers might have to cut other programs serving people struggling to get by. He suggested better options could be increasing tax credits to taxpayers with children, low-income workers and persons needing child care.

“Finding more ways to put money into peoples’ pockets at the end of the day, that’s what is really going to make a difference,” he said.

It will also make a difference if the Fed’s policymakers can get prices down without tipping the economy into an extended period of shrinking productivity and job losses. But that might prove difficult.

“What began as supply-constrained cost pressures from pandemic-related shutdowns — particularly in China — has been sustained by strong spending as consumers and businesses have emerged from the pandemic with pent-up demand and money to spare,” UHERO reported in its forecast released last week.

And that raises the question that economists and politicians have long debated: whether policymakers ended up providing too much stimulus. There was no playbook for dealing with the pandemic’s widespread business closings and the idling of major employers like airlines. And, Bonham said, Congress wanted to avoid another Great Recession.

But did lawmakers go too far?

“Economists are going to debate this for a long time,” he said.

“Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the as part of its CHANGE Framework project.