Local Prices Drop as National Prices Rise
SALT LAKE CITY, Utah; August 18, 2011 — In July 2011, on a non-seasonally adjusted basis, the Zions Bank Wasatch Front Consumer Price Index (CPI) decreased 0.2 percent, matching June’s 0.2 percent decrease. The national consumer price index, which is a culmination of all prices throughout the U.S., increased 0.1 percent on a non-seasonally adjusted basis in the month of July.
Local and national consumer economic anxiety rose this past month as tensions in Washington grew. Fear of a U.S. debt default led many investors to speculate the worst, leading to a decline in the market, rising interest rates, and a volatile dollar. The culmination of uncertainty and U.S. dollar volatility has led to a drop in commodity prices over the past few months, particularly crude oil, which currently sits at $85 per barrel.
Along the Wasatch Front, falling crude oil prices translate to lower costs at the pump for Utahns. In July, transportation costs decreased 0.6 percent as prices for gasoline, airfare, and new/used cars decreased. In the past two months, the price of regular unleaded gasoline in Utah has decreased $0.23, bringing the average price of regular gasoline in the state to $3.55, 14 percent lower than the nation’s high of $4.11 in Hawaii.
The effect of falling crude oil prices is not limited to the pump. In fact, the production of a variety of everyday household items is dependent upon the input of oil. Consumer good items such as hand lotions, perfumes, dishwashing liquids, and plastics are byproducts of crude oil. This helps explain why cosmetics prices experienced a 2.57% decrease over July. If commodity prices continue to fall, specifically crude oil, consumers along the Wasatch Front can expect to see lower prices for a variety of everyday household items.
This year, poor weather, rising global demand, and increased commercial transportation costs have led to a rise in the nation’s food prices – specifically meats, produce, and dairy. Utah’s food at home prices have remained relatively low, having decreased 0.1 percent in July. Low prices have added speculation to the notion that higher costs may come at the end of 2011 to mid-2012. The US Department of Agriculture has projected an increase of 3 to 4 percent in grocery store prices by early 2012. However, Utah food prices typically lag several months behind the national average, placing the projected price increase in mid to late 2012.
In July, the cost of housing dropped 0.1 percent due to decreases in apartment rentals and hotel/motel rates. As the summer months conclude, Utahns can expect housing costs to continue to fall as demand decreases. The Zions Bank CPI education index dropped 0.1 percent in response to lower children’s daycare cost. The medical care index fell 0.1 percent as non-prescription drugs prices decreased. Recreational costs in Utah rose last month 0.2 percent as broadband services increased in price.
Analysis and data collection for the Zions Bank CPI and the next Utah Consumer Attitude Index to be released August 30 are provided by the Cicero Group/Dan Jones & Associates, a premier market research firm based in Salt Lake City.
Zions Bank is Utah’s oldest financial institution and is the only local bank with a statewide distribution of financial centers, Zions Bank operates locations in communities throughout Utah and Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 17 consecutive years. Founded in 1873, Zions Bank has been serving the communities of Utah for more than 135 years. Additional information is available at www.zionsbank.com.