In May, on a non-seasonally adjusted basis, the Zions Bank Wasatch Front Consumer Price Index (CPI) rose 0.4 percent compared to the national increase of 0.1 percent (seasonally adjusted 0.2 percent decrease), as reflected in the Zions Bank and U.S. Bureau of Labor Statistics Consumer Price Indices reported last week.
The Wasatch Front CPI has increased by 2.3 percent over the last 12 months, slightly above the national CPI's rate of 2.0 percent over the same period.
In an interview on June 8, Federal Reserve Chairman Ben Bernanke said, "My best guess is that we'll have a continued recovery, but it won't feel terrific."
He indicated that the unemployment rate could be near double digits for some time and "a lot of people will be under financial stress." Bernanke reaffirmed that the U.S. should work to reduce the deficit, pointing to the impact of the European debt crisis on our own stock market. Additionally, forecasters have lowered predictions on US inflation for the next six months from 2.2 percent to 1.8 percent.
National and Wasatch Front prices diverged in May primarily because gasoline prices remained high in Utah. In addition to mostly constant May gasoline prices in Utah, a rise in vehicle maintenance, car insurance costs, as well as an increase in airfare prices also resulted in a 2.0 percent increase in total May transportation costs.
While the massive Gulf oil spill will likely not significantly impact Utah gasoline prices, the price of seafood, particularly shrimp, oysters and crayfish, will increase in some grocery stores and restaurants along the Wasatch Front. Locally, the Utah oil leak associated with the Chevron refining plant that took place in late June is also not expected to significantly impact gasoline prices.
Aside from the 2.0 percent increase in the cost of transportation, the Wasatch Front CPI saw minimal changes in all of the major expenditure categories in the month of May.
Housing and clothing prices both increased by 0.3 percent in May. Recreation prices increased slightly more at 0.7 percent. Prices of food at home decreased by 0.5 percent due to a fall in the price of beef, and education and communication prices decreased by 0.9 percent due to a fall in the price of personal computers. Medical care, other goods and food away costs all remained stable in the month of May.
"Businesses and individuals can learn from trends we see in the consumer price index," said Zions Bank President and CEO Scott Anderson. "Federal Reserve policy, which impacts mortgage rates as well as personal and auto loans, is directly related to increases and decreases in inflation. Utah unemployment is still elevated and consumers are holding back, even though they are testing the waters. All of these factors explain Utah's slow but steady inflation growth."
Trends along the Wasatch Front usually apply to most other areas of the state as well, with one of the exceptions being that rural areas often have higher prices for gasoline and diesel fuel.