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Salt Lake City – The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.7 percent from April to May on a non-seasonally adjusted basis. Over the last 12 months, prices have increased in Utah by 1.9 percent. The national Consumer Price Index, released by the Bureau of Labor Statistics, increased 0.3 percent from April to May on a non-seasonally-adjusted basis and has increased 2.1 percent over the past 12 months.
Overall, transportation costs increased 1.9 percent in Utah from April to May as Utahns experienced an expected seasonal increase in gasoline prices. On average, Utahns paid $3.59 per gallon of gasoline in May, up from an average of $3.37 in April. While this is a significant increase month-over-month, this would still only equate to a total increase of about $3.30 each time a consumer fills his or her car, assuming that an average gasoline fill-up is approximately 15 gallons. Nonetheless, gasoline prices have risen 17 percent over the past five months, or up from $3.06 in December.
Gasoline prices are expected to remain generally steady for the remainder of the summer driving season before beginning to fall toward the end of the summer. The average price for a gallon of gasoline in Utah currently stands at $3.57, which is actually down from $3.62 at this time last month, according to AAA.
Nationally, prices have remained steady over the last month as well, with the current national average sitting at $3.66, up slightly from $3.65 at this same time last month. The national average has steadily declined to start the summer driving season in each of the past three years. Pending any major geopolitical concerns, significant refinery disruptions, or severe hurricanes, this year is expected to be no different.
Food-at-home prices moved 1.0 percent higher from April to May due to higher produce and dairy prices. Produce prices in particular have moved substantially higher recently, increasing by an average of 3 percent each month in 2014.
Consumers will likely see a continued rise in produce prices due to the ongoing drought in California. According to a new study released by an agribusiness expert from Arizona State University, California could lose up to 20 percent of its crops this year. California grows over 200 different crops and is the primary supplier for a number of high-demand produce items such as avocados, grapes, lemons, melons, peaches, plums and strawberries. The report concludes that fruits and vegetables that are particularly sensitive to water constraints—like avocados and lettuce—could increase as much as 30 percent in price over the next few months. The report’s publisher notes the substantial price jump will likely be temporary, though, as foreign suppliers will soon be incentivized to ship more crops to the U.S. due to the higher domestic prices. This will in turn increase supply and normalize prices.
In other categories, utility prices rose 4.8 percent from April to May, as electricity providers switched consumers from their cheaper, winter rate to their more expensive summer rate. Education and communication prices rose 1.2 percent as college tuition prices moved higher. Medical care prices jumped 0.9 percent behind higher prescription drug costs, and food away from home increased 0.8 percent due to higher prices at certain full-service restaurants across the state. Housing prices fell 0.4 percent behind significantly lower hotel prices in May, and recreation prices decreased slightly, falling 0.2 percent, thanks to lower prices for pets and pet products. Clothing prices were unchanged from April to May. Other goods and services increased 0.3 percent.
“With regard to rising gasoline prices, there is light at the end of the tunnel,” said Scott Anderson, Zions Bank president and CEO. “We saw an increase in gasoline prices during the month of May, but more current indicators show that the seasonal price increase is likely drawing to a close, and consumers should expect stable, if not slightly lower, gasoline prices during the next few months. This should help ease the burden of rising prices consumers are experiencing in other areas.”
Analysis and data collection for the Zions Bank CPI and the Zions Bank Consumer Attitude Index are provided by the Cicero Group.