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Salt Lake City — The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.2 percent from January to February on a non-seasonally-adjusted basis. Over the last twelve months, prices have increased in Utah by 1.1 percent. The national Consumer Price Index, released by the Bureau of Labor Statistics, increased 0.4 percent from January to February on a non-seasonally-adjusted basis and has increased 1.1 percent over the past twelve months.
Utahns paid 1.3 percent more for recreational activities in February. More specifically, consumers saw prices increase for cable and satellite television. One of Utah’s primary providers of satellite television raised prices by an average of 3.7 percent for each of its service bundles, citing rising programming fees from content providers and broadcast networks. Consumers could potentially see further substantial price increases for television services following last month’s announcement that Comcast and Time-Warner Cable will merge. Although the proposed merger will take months to complete, many analysts believe the new company will have unprecedented control on the market and will have the potential to increase prices considerably.
Consumers also paid slightly more for gasoline in February than they did in January. This increase is in line with typical seasonal trends, as gasoline prices generally begin to rise in February and peak in the summer. Still, this year’s seasonal price increase started much more slowly than it did last year. Last year, the average price per gallon of gasoline jumped to $3.30 in February from $2.91 in January, but in 2014, the average price per gallon of gasoline only increased to $3.14 in February from $3.11 in January due to a lack of major geopolitical tensions in oil producing countries, along with cold temperatures suppressing demand. Because gasoline prices were substantially higher in February 2013 compared to February 2014, overall transportation costs are down 2.5 percent year-over-year.
In the months ahead, consumers can expect to see gasoline price increases accelerate, thanks in large part to increased demand and the seasonal switch from winter blend gasoline to summer blend gasoline. The EPA requires that gasoline manufacturers create a purer, more expensive blend in the summer months to prevent gasoline from evaporating at a higher rate due to the warmer temperatures. This is especially relevant for cities like Los Angeles, New York City, and Salt Lake City that need to take extra precautions in their efforts to prevent smog. Gasoline prices have already started to move higher. Utah’s average gasoline price currently stands at $3.39, up from $3.15 a month ago, according to AAA. This is in line with national trends, as the average price per gallon of gasoline nationally currently stands at $3.52, up from $3.35 a month ago.
In other categories, education and communication prices rose significantly, up 1.2 percent from January to February, primarily due to increased costs for cellphone plans. Prices for utilities increased 0.3 percent due to higher water costs in certain parts of the state. Food away from home prices rose 0.2 percent due to an increase in price at some fast food restaurants, and housing prices inched 0.1 percent higher due to higher hotel and rent prices. Other goods and services also rose 0.7 percent. Food at home prices fell 0.5 percent due primarily due to decreases in price for pork and flour/prepared mixes. Medical care prices fell 0.3 percent and clothing costs were unchanged.
“As expected, gasoline prices inched higher throughout February, and we are clearly in the early stages of our seasonal increase in gasoline prices,” said Scott Anderson, Zions Bank president and CEO. “Because of this, we expect increased inflation in the months ahead on both a month-over-month and year-over-year basis. However, increased inflation should not be concerning, as we are still well below the ideal year-over-year inflation target of 2-3 percent.”
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 March 25, 2014.