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The Zions Bank Wasatch Front Consumer Price Index (CPI) decreased to start the New Year, falling 0.2 percent from December to January. Over the last twelve months, prices have increased 2.3 percent on a non-seasonally adjusted basis. In comparison, national inflation reported by the Bureau of Labor Statistics has remained under 2 percent year-over-year, with a 0.3 percent increase in January from December.
Transportation prices decreased substantially for the third consecutive month, as gasoline prices across the state fell by an average of 35 cents per gallon in January, after decreasing by 42 cents per gallon in December. Unlike December, prices in all other areas collected in the Zions Bank Wasatch Front CPI increased to some degree, which counteracted the sharp decline in transportation prices.
Transportation prices across the Wasatch Front dropped 3.2 percent from December to January. Prices at the pump continued their precipitous decline in Utah, while fuel prices across the nation stabilized, which lead to a 0.2 percent increase in transportation costs nationally. Local gasoline prices are following two consistent trends. First, fuel prices normally bottom out in January as consumer demand and production costs fall to 12-month lows. Second, for the last 18 months, changes in Utah gasoline prices have lagged behind national averages by approximately four weeks.
“Gasoline prices generally follow a seasonal pattern,” said Zions Bank President and CEO Scott Anderson. “We expected fuel prices to fall from their highs in September, just as we expect them to increase from their lows in January as we head into the spring and summer. While consumers have come to expect some short-term fluctuations in gas prices, they cannot anticipate where prices will ultimately settle, which can have implications on their discretionary income from month-to-month.”
Aside from transportation prices, all other price categories in the CPI increased from December to January.
Housing prices are normally more stable than transportation prices in the short term. The housing category is the most heavily weighted in the CPI because approximately 35 percent of consumer spending in Utah is dedicated to housing and related products and services. Since housing prices are generally stable and represent such a large proportion of consumer spending, the 0.6 percent increase in housing prices from December to January is a significant development. Over the last 12 months, these prices have risen 3.7 percent locally and 1.8 percent nationally. A moderate level of housing inflation signals that consumer demand is returning to a key area of the economy, and is a positive sign for the housing recovery.
Medical care prices jumped 1.3 percent from December to January, compared to 0.5 percent nationally. National medical care costs outpaced average inflation by 1.6 percentage points in 2012, while the Wasatch Front had relatively minimal medical care inflation over the last year. Medical care prices adjusted in January and are now aligned with national averages.