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Salt Lake City — The Zions Bank Wasatch Front Consumer Price Index (CPI) decreased 0.3 percent from September to October on a non-seasonally-adjusted basis. Over the last twelve months, prices have increased in Utah by 1.2 percent. The national Consumer Price Index, released by the Bureau of Labor Statistics, also fell 0.3 percent from September to October on a non-seasonally-adjusted basis and has increased only 1.0 percent over the past twelve months.
For the second consecutive month, falling gasoline prices were the impetus for the overall decline in the Zions Bank CPI. Consumers paid about $3.44 per gallon of gasoline in October, compared to $3.58 in September, and overall transportation costs fell 1.8 percent month-over-month. Transportation costs are now down 3.7 percent year-over-year because consumers have paid substantially less for gasoline this year than last year. Gasoline prices are down approximately 9 percent year-over-year, and this has weighed down the entire CPI to the extent that the CPI has actually increased 2.5 percent over the past twelve months when transportation costs are excluded.
Gasoline prices have continued to fall in November, as well. The average price of gasoline in Utah has already fallen about $0.10 per gallon since the beginning of the month, and consumers nationally are seeing similar trends. About 25 percent of the nation’s pumps are selling gasoline for under $3.00, according to AAA. Looking ahead to the remainder of 2013, gasoline prices will likely continue to fall due to growing supplies. The Wall Street Journal recently reported that October’s national gasoline supply was at a three-year high, yet refiners have continued to operate at, or near, full capacity because of swelling demand for diesel fuel in Latin America and Europe. This is pushing down gasoline prices because on average, a barrel of crude oil produces 19 gallons of gasoline and 11 gallons of diesel fuel, and refineries cannot produce one fuel type without producing the other. Continued demand for diesel fuel will keep gasoline supplies high and prices relatively low over the next several months.
Food at home prices, down 0.7 percent month-over-month, fell again in October primarily due to a decrease in the price of produce and dairy products. Produce prices have now fallen three consecutive months after increasing in six of the eight prior months. Over the past twelve months, prices for food at home are only up 0.6 percent, well below their historic average annual increase of 3.0 percent. Food away prices saw a modest decline of 0.2 percent after jumping about 1.6 percent over the past two months thanks in part to a slight decline in prices at fast food restaurants.
In other categories, clothing costs increased 0.5 percent as retailers continued to switch out their cheaper summer clothing lines for their more expensive winter clothing lines. Recreation prices, particularly sporting goods prices, increased in anticipation of the upcoming winter ski season. Medical care and housing costs increased 0.3 percent and 0.2 percent, respectively, and the prices for other goods and services increased 0.5 percent. Utility prices decreased 0.7 percent as electricity costs fell in certain areas across the Wasatch Front. Education and communication prices fell 0.2 percent —a decrease in the price of personal computer and internet plans offset a slight increase in the price of elementary education.
“As the holiday spending season rapidly approaches, consumers should be pleased by the rate at which we are seeing gasoline prices fall,” said Scott Anderson, Zions Bank president and CEO. “Low gasoline prices, and at least a temporary resolve of the political gridlock in Washington D.C., should go a long way toward restoring consumer confidence in the economy and spurring consumer spending.”
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 November 26, 2013.