The Zions Bank Wasatch Front Consumer Price Index decreased 0.1 percent from November to December on a non-seasonally adjusted basis.
The index has increased 0.5 percent since this same time last year. The national Consumer Price Index, released today by the Bureau of Labor Statistics, decreased 0.6 percent from November to December on a non-seasonally adjusted basis and has increased 0.8 percent over the past twelve months.
Transportation prices experienced their largest month-to-month drop on record in the Wasatch Front CPI, declining 4.4 percent from November to December. The closest comparison is the 3.9 percent decline experienced in December 2012. Gas prices were the main driver of the drop in transportation prices, but lower car insurance packages also played a role. Gasoline averaged $2.66 per gallon in December, down from $3.11 in November. Gas prices currently stand at $1.99 per gallon in the state of Utah and $2.08 per gallon nationally.
Low oil prices continue to impact gasoline prices and are having a large impact on national and regional economies around the world, particularly Russia and Venezuela, among others. Most oil price projections for 2015 do not anticipate a rebound, and some industry experts have expressed their expectations that oil will never again reach $100 per barrel. Brent crude oil futures currently stand at approximately $50 per barrel. Six months ago, crude futures were about $108 per barrel.
Although consumers are saving significantly at the pump, they are simultaneously paying a little bit more at the grocery store. Food at home prices increased 1.3 percent from November to December. A large portion of the increase was due to higher meat and poultry prices. Although beef prices in Utah did not see consistent increases throughout 2014, they have been increasing recently, and beef prices nationally rose every month last year. U.S. cattle inventory is at its lowest level since 1951, having declined as a result of three years of serious drought. Ramping up beef production after having to cut back takes time, partly because heifers typically only have one calf at a time. The decreased supply of cattle has led to higher beef prices for consumers. Poultry and pork prices also increased in December along with citrus fruit and apple prices.
The price of several different utilities shifted in December, with an overall utilities price index increase of 1.2 percent. Water rates decreased the most, and garbage pick-up rates also declined. Gas and electricity rates both increased in December. Electricity use varies with the weather, and residential housing has the largest seasonal variance of use. Because homes are heated with a variety of fuels in the winter, higher utility prices affect consumers differently.
Housing prices increased 1.0 percent from November to December. The housing price index reflects fluctuations in such areas as apartment rental prices, hotel and motel prices, and maintenance prices. December’s price increase is reflective of higher hotel and motel prices, which rose slightly in December for the holiday season. Apartment rent prices also increased last month.
Medical care increased 0.8 percent from November to December as hospital and related services became more expensive. Prescription drug prices dropped slightly, counterbalancing part of the increase in hospital services. Food away from home, including meals at restaurants and coffee shops, increased 0.6 percent in December, and clothing prices increased 0.2 percent. Recreation, education and communication, and other goods and services prices remained essentially flat.
“The substantial decrease in gas prices is sure to have a positive effect on consumer expectations and buying behavior,” said Scott Anderson, Zions Bank president and CEO. “Strong economic growth and low prices mark a great beginning for 2015.”