SALT LAKE CITY, Utah; October 19, 2011 — In September 2011, on a non-seasonally adjusted basis, the Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.1 percent. The national consumer price index, which is an aggregation of all prices throughout the U.S., increased 0.2 percent on a non-seasonally adjusted basis.
Since January of this year, Utah has experienced a 2.8 percent inflation rate, which is consistent with the Federal Reserve’s optimal inflation rate of 2 to 3 percent. An inflation rate of 2.8 percent means that if a consumer spent $1,000 on a specific bundle of items in January of this year, that consumer would now have to spend $1,028 for that same bundle of items today.
For many individuals, the CPI does more than monitor fluctuations in price. Many local institutions, such as businesses, banks, and courts, use the CPI to make informed decisions that ultimately affect Utah residents.& Below are just a few examples of how the Zions Bank CPI may be used.
- Adjusting interest rates: Lending institutions will often rely on the CPI to adjust interest rates for borrowing.
- Determining employee pay: Employers will often look at the cost of living (e.g. prices), to determine an employee’s starting pay, pay raise, and perhaps annual bonus.
- Judicial rulings: In some cases, such as long-term contracts (e.g. alimony or child support), inflation trends may be taken into the consideration.
Since September of last year, Utah has experienced an inflation rate slightly below the national average, which currently sits at 3.9 percent. Since May, the inflationary gap has grown as local prices hold steady amid national increases. Last month, food at home along the Wasatch Front remained unchanged for the first time since December of last year. Year-to-date, food at home has risen 3.3 percent as produce, wheat, and meats have become more expensive.
Housing prices along the Wasatch Front — which consist of renting costs, home maintenance, and hotel rates — increased 0.8 percent in September. Year-to-date, the housing index has risen 2.4 percent. Leading this year’s housing index increase are rising hotel/motel rates, which have risen 14 percent since January.
Clothing prices, which account for 4.8 percent of a consumer’s income, decreased 0.5 percent due to declines in the price of women and children’s apparel. Medical care costs decreased 1.7 percent in September, the largest drop year-to-date. Since June, medical care costs have fallen 3.4 percent as medical care service prices have decreased.
Wasatch Front recreational costs — which consist of electronics, entertainment, pet products, membership fees, etc. — rose 0.4 percent in September. The increase is credited to a rise in the price of cable/satellite TV. The education and communication price index remained unchanged last month.
As reported in September’s Zions Bank Consumer Attitude Index (CAI), 45 percent of Utahns believe interest rates for borrowing will decrease over the next 12 months. A fall in interest rates may put downward pressure on local prices in the state, perhaps further widening the gap between local and national inflationary rates.
Analysis and data collection for the Zions Bank CPI and the next Utah Consumer Attitude Index is to be released October 25 are provided by the Cicero Group/Dan Jones & Associates, a premier market research firm based in Salt Lake City.
About Zions Bank
Zions Bank, a division of ZB, N.A., operates 122 full-service financial centers 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 consistently ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 23 years and Idaho’s Boise District for the past 15 years. Founded in 1873, Zions Bank has been serving the communities of the Intermountain West for more than 140 years. Additional information is available at www.zionsbank.com.