Gasoline prices begin to fall, but strong housing market still drives overall CPI increase

The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.4 percent from June to July on a non-seasonally adjusted basis.

Year-over-year, the Wasatch Front Consumer Price Index has grown 5.4 percent, which marks the third month in a row that Utah has had record-setting year-over-year price index growth, while the National Consumer Price index has increased 2.9 percent since July of last year.

Rising prices in the housing industry caused two thirds of the increase in overall cost of living statewide. Increases in food away from the home was the next largest factor, contributing to 20 percent of the month-to-month increase.

For the first month since March, transportation was not a leading cause of price increases, ending the largest three-month stretch of transportation price increases ever measured since Zions Bank began measuring the Consumer Price Index in 2010. Transportation prices overall edged down because of a slight decrease in the price of gasoline over the past month.

Even with this month’s slight decrease to transportation, housing and transportation price increases are by far the largest contributors to the year-over-year price increase, together contributing to over 80 percent of the increase. Education and food away from the home combined contribute about 10 percent of the year-over-year increase. Both transportation and housing are at the highest levels this Index has seen since it began in 2010. Housing has seen a steady increase in price since 2010, and transportation had been trending up overall since February 2016.

“It is common for gasoline prices to drop slightly as summer comes to a close,” said Scott Anderson, president and CEO of Zions Bank, “So this record growth in prices along the Wasatch Front may slow in the coming months. With regards to the housing industry, Utah’s strong job growth continues to attract more people to Utah. The construction industry’s year-over-year job growth is strong, with 6.2 percent growth over the last 12 months, which means they are working hard to meet demand.”

“Gasoline prices do affect the prices of industries with shipped goods, like food,” said Randy Shumway, chairman and partner at Cicero Group. “Food goods for both food at home and food away from the home are shipped all over the state and nation, which requires fuel. And the price of fuel factors into the prices that consumers see when they go out to buy food. But Utah could have different trends than the U.S. because of differences in demand. One of the reasons why the prices of food at home may have dropped year-over-year in Utah while the prices of food away from the home have increased year-over-year could be a change in demand. If more and more people prefer to eat out over eating at home, then the demand changes will increase the prices for food away from the home and put downward pressure on the prices for food at home.”

Analysis and data collection for the Zions Bank CPI and the Zions Bank Consumer Attitude Index are provided by Cicero Group, a premier market research firm based in Salt Lake City.