CPI drops slightly but still ahead of Fed inflation goal

With decreases in food and transportation prices, it costs Utah consumers slightly less to live for the second month in a row. But the Zions Bank Wasatch Front Consumer Price Index (CPI) still sits above the Fed’s national inflation target, with a 2.1 percent increase over the past year. The Fed’s target is 2 percent.

The CPI decreased 0.2 percent from November to December on a non-seasonally adjusted basis while the national Consumer Price Index remained mostly unchanged overall from November to December but has also grown 2.1 percent over the past year.

The month-over-month decrease in Utah’s overall CPI was driven by lower prices for food at home and transportation, which fell 1.3 percent and 1.1 percent, respectively. Food-at-home prices fell as prices for citrus fruits, lettuce and tomatoes declined. Lower transportation prices were driven by lower prices for vehicles and gasoline. On the other hand, medical care prices increased more than any other sector as prices for a number of services rose. Medical care prices rose 2.2 percent in December and have increased 3.5 percent since last year.

“Oil and gas prices are on the rise nationally and globally,” said Scott Anderson, Zions Bank president and CEO. “Utah drivers, however, continue to be spared at the pump, as Utah continues to sit on the list of top 15 cheapest gasoline markets in the country.”

The decline in Utah’s overall CPI was also driven by lower prices in the following categories:

• Prices for other goods and services decreased 0.5 percent as prices for laundry and personal care and hygiene products declined.

• Housing prices fell 0.4 percent as hotel and motel rates fell.

• Clothing prices decreased 0.2 percent as prices for men’s apparel and jewelry and watches declined.

• Prices for utilities declined 0.2 percent, driven by lower prices for propane.

• Education and communication prices declined 0.1 percent as fees for some elementary and high schools decreased.

Utah’s price decreases were slightly offset by higher prices in the following sectors:

• Recreation prices increased 1.4 percent as cable subscription rates and prices for pet products rose.

• Food-away prices increased 0.2 percent this month as prices for alcoholic beverages and fast food and snacks rose.

“Increasing inflation can sometimes spark fears that price increases will outpace wage growth,” said Randy Shumway, chairman and founder of Cicero Group, the market research firm that conducts the CPI polling. “But wages grew last month at the quickest pace since 2009, indicating that American workers are keeping up with our rapidly growing economy.”