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The Zions Bank Wasatch Front Consumer Price Index (CPI), which collects prices on over 1,000 items each month, increased 0.6 percent from August to September. The national, non-seasonally adjusted CPI also increased 0.4 percent as gasoline and housing prices increased in both indices. The Wasatch Front CPI has increased 3.9 percent over the last 12 months, which is outpacing the national CPI, which has risen 2.0 percent.
Historically, gasoline prices have peaked in the summer and steadily declined throughout the fall. There are two explanations for this trend: first, oil refineries change the chemical composition of the fuels they produce in the winter, which decreases manufacturing costs; second, September signals the end of summer vacation, and as families with school children travel less the demand for gasoline decreases significantly.
However, unusually low levels of supply this fall — due to geopolitical unrest in the Middle East and unanticipated closures at some domestic refineries — have reversed the conventional narrative. Average gasoline prices across the state increased by more than 25 cents from August to September. Additionally, the price of flights from the Salt Lake International Airport spiked for the first time in five months. The combination of these two factors drove local transportation prices up 2.5 percent, which accounts for more than 60 percent of September’s inflation.
“Consumer spending and confidence are up across the state, despite unseasonably high gas prices,” said Zions Bank President and CEO Scott Anderson.
Anderson stated that the positive economic momentum was due, in part, to the recovery in the housing sector, “The Utah housing market has sustained positive traction since the beginning of 2012. Increases in the value of homes equate to increases in homeowner equity. Consumer confidence and spending should continue to recover as long as the housing market keeps trending upward,” he said.
Housing prices across the Wasatch Front increased in September by 0.4 percent, compared to a 0.1 percent rise nationally. The price of home furnishings and appliances increased considerably, another sign that consumer demand is driving prices higher in Utah. Retailers anticipate brisk sales this holiday season, which translates into higher prices for consumer goods like refrigerators, televisions and furniture.
Increased consumer demand also drove clothing prices higher across the Wasatch Front last month. Local apparel prices increased 0.3 percent in September, while national prices increased 4.1 percent. Women’s and children’s apparel propelled inflation in this area, as back-to-school shopping amplified foot traffic at local fashion retailers.
Locally, the only consumer goods to see prices fall from August to September were recreational items, which decreased for the third consecutive month. The 0.1 percent decrease was a larger decline than the national average, which remained unchanged from August.
Fuel prices are expected to come down from their unseasonably high levels. If historical trends hold true-to-form, the state should see lower gas prices just in time for the holiday shopping season.
Analysis and data collection for the Zions Bank CPI and the Zions Bank Consumer Attitude Index are provided by the Cicero Group. The Cicero Group is a premier market research firm based in Salt Lake City. The Zions Bank Utah Consumer Attitude Index will be released October 30.