SALT LAKE CITY, Utah; February 17, 2012 — In January 2012, on a non-seasonally adjusted basis, the Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.2 percent.
The national consumer price index, which is an aggregation of all prices throughout the U.S., increased 0.4 percent on a non-seasonally adjusted basis.
In a Senate Budget Committee last week, Federal Reserve Chairman Ben Bernanke, stated that 2012 inflation will likely decline below 2 percent. For a nation with high unemployment, lower inflation equates to additional savings for many Americans.
Local inflation edged up slightly last month, likely the result of annual price adjustments. At the start of each year, it is common for businesses to evaluate their goods and perform an annual price review, which is based on a variety of factors (e.g. prior inflation, consumer demand, raw material costs, etc.). At the same time, the average price of regular gasoline in the state continued to fall, causing transportation costs to decrease 1.3 percent. Due to declining gasoline prices, lower transportation costs offset much of January’s increased price adjustments.
According to the AAA Daily Fuel Gauge, the average price of regular gasoline in Utah throughout January was $2.97, $0.13 less than the month prior. Year-over-year, transportation costs have increased 2.9 percent along the Wasatch Front. For Utah, higher transportation costs may be in the near future as gasoline prices are expected to increase in the coming months.
The question, “how much will gasoline prices increase?” depends on two factors: Middle Eastern relations and Greece’s debt crisis. In recent weeks, optimism has fluctuated over a Greek debt deal, causing crude oil prices to oscillate. Tensions between Israel and Iran continue to warrant caution, which may push gasoline prices higher as oil investors speculate the worst.
Looking to the future, gasoline costs will likely rise in the next few months, but these price increases are not indicative of general inflation. In the past 12 months, inflationary trends along the Wasatch Front have grown at a healthy and appropriate pace.
For Utahns, housing costs were slightly more expensive in January. Housing, which accounts for approximately 35 percent of Utahns’ income, increased 0.7 percent in January. Year-over-year, housing prices have increased 3.0 percent along the Wasatch Front, which is in line with national inflation. Price adjustments in hotel and motel, as well as household appliances, were the primary contributors to January’s housing inflation.
In January, food at home prices increased 1.4 percent, making the category’s overall six-month price increase 3.0 percent. Much of the upward price pressure is the result of several combined factors: population growth has increased global demand, rising oil prices have increased commercial transportation costs, and poor global weather has weakened supply. However, there is good news. U.S. farmers will plant the most acres of corn, soybeans, and wheat in almost 30 years this season, which will likely put downward pressure on food prices later this year.
“Utah’s recovery has been gaining sound traction as local economic indicators strengthen,” said Zions Bank President and CEO Scott Anderson. “Inflation along the Wasatch Front has kept to a healthy pace over the past 12 months, helping support business development and consumer spending. We anticipate general inflation along the Wasatch Front to remain subdued this year, helping facilitate the state’s economic recovery.”
Analysis and data collection for the Zions Bank CPI and the Utah Consumer Attitude Index, to be released February 28, 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.