Honolulu 4^th Most Expensive U.S. City

December 1, 2003

Cost of Living estimates released November 7 confirm that Honolulu is among the nation’s most expensive areas, surpassed only by Jersey City, Manhattan and San Francisco.  According to the ACCRA Cost of Living Index, Honolulu was the 4^th most expensive place to live among 307 urban areas surveyed during the third quarter of 2003.

The ACCRA survey is intended to measure regional cost differentials faced by professional and executive households in the top income quintile, as reflected in prices of a fixed “market basket” of goods and services.  It may not reflect the relative costs faced by individuals with different consumption patterns. ACCRA (www.accra.org), a national association of community and economic development research professionals, compiles and publishes the Cost of Living Index on a quarterly basis.  UHERO conducts the Honolulu price survey for ACCRA.

Honolulu’s cost for a professional/managerial standard of living is 54.4 percent above the national average, making it slightly more expensive than Long Beach, San Diego and Washington DC.  According to the ACCRA figures, Honolulu is now 27 percent cheaper than San Francisco and 17 percent more expensive than Washington DC (Table 1).

Table 1.  ACCRA Composite Index for selected US urban areas, 2003, third quarter

(National average = 100)

Among expenditure components, Honolulu has the highest prices of cities surveyed for the standard basket of grocery items, electricity and gasoline. Grocery prices are 52 percent more expensive than the national average. Gasoline is 32 percent more expensive. Hawaii’s housing prices, more than double that of the national average, also remain among the five highest in the country (Manhattan, San Francisco, Stamford and Long Beach have higher housing prices).  Health care and prices for miscellaneous goods and services (fast food, clothing, recreational activities, and other items), on the other hand, are not far above the national average.

Breakdown by Expenditure Components
(Percent Above or Below National Average Prices)

While the ACCRA Cost of Living Index provides one measure of relative costs, it has its limitations. First, the ACCRA index is not representative of the entire population, because its “basket” of surveyed items is designed to reflect buying habits of professional and executive households in the top income quintile.  For example, housing costs are given a relatively heavy weight in the ACCRA index because high-income households tend to spend more on housing than the average family.  Second, because the ACCRA index uses a fixed market basket of nationally available goods and services, it does not reflect regional differences in consumption patterns.  People in Honolulu, for instance, may consume relatively fewer cereals than other breakfast products because of the high relative prices of cereals and milk.  If so, then the ACCRA index may overestimate their actual costs.  Culturally based differences in consumption patterns are also ignored. 

The ACCRA survey is conducted on a quarterly basis.