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Salt Lake City —The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.4 percent from February to March. Over the last twelve months, prices have increased 2.3 percent on a non-seasonally adjusted basis. In comparison, prices have increased nationally at a rate of 1.5 percent year-over-year, with a 0.3-percent increase from February to March, as reported by the Bureau of Labor Statistics. Rising housing and transportation prices were the primary drivers for inflation this month.
Transportation prices (up1.1 percent) increased more than any other category, driven primarily by higher gasoline prices across the state. The average price of gasoline in the state of Utah jumped 50 cents per gallon over the past two months, increasing transportation prices 4.4 percent since January.
This is typical, given gasoline’s seasonal pricing pattern of bottoming out in January, then picking up again into the spring and summer months due to increased demand and the switch from winter-blend gasoline to summer-blend gasoline. The Environmental Protection Agency requires the use of purer, reformulated gasoline blends from spring through early fall to mitigate pollution and the heightened propensity for smog when temperatures rise across the states.
While transportation costs saw the sharpest increase, housing costs (up 0.7 percent) had the most significant impact on this month’s inflation figures, since housing represents the largest share of consumer spending (approximately 35 percent). Housing costs — which include rent, hotel room rates, and the purchase of common household appliances —increased for the third month in a row, resulting in an increase of 3.7 percent over the past twelve months. Because these costs are generally stable, and given the size of their share in consumer spending allocations, the 0.7 percent increase this month is considerable. According to the most recent report from the Utah Association of Realtors, median home prices are up 13.3 percent and inventory of homes for sale is down 22.4 percent. These data point to an improvement in consumer demand for key areas of the economy and corroborate the positive data seen in the local housing market.
Education and communication prices fell 1.2 percent from February to March, compared to 0.1 percent increase nationally. However, even after this month’s decrease, education and communication prices have inflated more than the price of any other category within the CPI over the past 12-months, largely due to increasing tuition prices across the state’s educational institutions. This trend will likely continue, as the Utah Board of Regents recently raised tuition by 5 percent across all public colleges and universities. This month’s price reversal was largely due to a fall in communication technology prices, such as mobile phone plans and computer accessories, as education prices remained flat.
Other categories were mixed this month. Prices declined in recreation (down 0.4 percent) and medical care (down 0.1 percent), but increased in food at home (up 0.5 percent), clothing (up 0.4 percent), and other goods and services (up 0.1 percent). Prices for food away and utilities remained unchanged from February to March.
“We have several reasons to be optimistic about our local economy,” said Scott Anderson, Zions Bank President and CEO. “Our housing market is strengthening, our exports grew nearly 40 percent this year, and our pro-business tax policies and well-educated workforce are enticing more and more employers to our state every year.”
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 April 30, 2013.