Wally Senff, a co-owner of a Torrance aircraft parts maker, knows all about the havoc that inflation can wreak on a business.

A foot-long piece of nickel used to make metal castings costs $500, about double the cost a year ago. During that same time, fuel costs have surged more than 25 percent and health care costs 12 percent.

For months, Senff’s firm, Ely Co. tried to hold the line on costs by not filling vacant positions and passing on health care costs to employees. But last month, the cost pressures became too much: Ely raised its prices 10 percent to 15 percent. “All our competitors are raising prices and we had no choice but to raise prices, too,” Senff said.

Decisions like these help explain why the Los Angeles region’s year-over-year inflation rate has surged to 4 percent over the last 12 months, according to the federal Bureau of Labor Statistics. That’s well above the national average of 3.2 percent and the fastest rise since 1990. (The BLS tracks prices for Los Angeles, Orange and Riverside counties collectively and does not break out individual counties.)

While L.A.’s inflation rate historically has been higher than the rest of the nation, the spread has widened in recent months as a result of skyrocketing local energy and housing costs. In addition, local health care costs, which had been slightly lower than national averages, have now caught up, thanks in part to the region’s huge uninsured population.

“It’s a triple whammy,” said economist Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.

Should this inflation surge continue for an extended period, it could have widespread implications for the local economy. Pressures could build for bigger wage increases and consumers, faced with higher bills for many basic necessities, could cut back on discretionary spending.

Industries driven by local marketplace dynamics will likely be forced to pass on costs to consumers. But those companies competing in the global marketplace may not be able to raise prices significantly, meaning they will have to cut costs even more just to survive.

Locally, attention is on energy and housing. For much of the 1990s, these two sectors were relatively stable and were a major reason why the region’s inflation rate averaged less than 2 percent for most of the decade.

But now both are skyrocketing, driving prices that were already higher than the rest of the nation to even more stratospheric levels. Gasoline prices are about 25 percent higher than a year ago.

At Culver City-based Flanigan Farms, a packaged health foods distributor, an increase in prices may be unavoidable if fuel costs don’t come down, according to the company’s president, Patsy Flanigan. “Of course, if we raise our prices, the grocery stores that we distribute to will raise their prices, too,” she said.

Rising fuel costs have been felt in a different way at Torrance-based Pelican Products Inc., an injection molder that makes plastic casings and shock-proof flashlights. Chief Financial Officer Rick Kern said that in the last few months, the company’s third-party shippers have tacked on substantial fuel surcharges.

Meanwhile, home prices in L.A. County have also risen more than 20 percent in recent year-over-year monthly comparisons. Rents, generally regarded as a more accurate indicator of inflation, increased at a 6.2 percent clip in the second quarter of 2005 compared with the same period in 2004, according to Novato-based real estate research firm RealFacts.

Those two factors helped push the area’s housing cost index up 5.7 percent in July over July 2004 levels, according to George Huang, economist at the Los Angeles Economic Development Corp. That compares to a 3 percent nationwide increase, he said.

“It’s not just rents, but the cost of maintaining a home that’s gone up,” Huang said.

As a result, to attract and retain employees, companies like Pelican Products have been forced to hike wages at levels above the inflation rate. “The wage marketplace has really escalated,” Kern said.

Another factor hitting the bottom lines of companies hard has been health care. Premiums have been increasing at double-digit rates for three years and employers have increasingly passed those costs on to workers. The L.A. area’s medical cost index showed a 5.1 percent increase in July over July 2004, compared to a 4.1 percent rise nationwide. (The medical cost index factors in the costs borne by employees, which is why it typically lags behind premium increases.)

In years past, medical costs in Southern California had lagged behind national levels because of the high penetration of health maintenance organizations. Now, as HMOs in California have raised their premiums, the cost-differential has lessened, Huang said. Also, the L.A. region’s huge pool of uninsured patients has resulted in sharply higher costs for treating other patients at local hospitals, he said.