High prices hit consumers

Energy prices pulled the overall cost of living higher locally and nationally in January, according to data released Wednesday.

Consumer prices along the Wasatch Front jumped 0.5 percent in January, on the back of a 4.1 percent bump in transportation prices, according to the latest cost of living report from Wells Fargo Bank.

Nationally, the government's most closely watched inflation barometer, the Consumer Price Index, advanced by 0.7 percent, compared with a 0.1 percent dip in December. Again, energy prices proved the primary driver.

"Consumers continue to be battered by rising costs," said Joel Naroff, president of Naroff Economic Advisers. "It's tough out there for most households."

The price of crude oil on Wednesday was back above $60 per barrel, buoyed in part by fears about instability in Iran, Iraq, Nigeria and Venezuela. Over the last eight months, the per-barrel price for crude has swung between $57 and $67 per barrel.

However, there is some good news, according to Kelly K. Matthews, executive vice president and economist at Wells Fargo. Supplies of crude oil are plentiful, and Matthews said energy prices could begin making their way down again if events in those tumultuous oil-producing countries calm a bit.

"My guess is that if we don't hear anything radical coming out of those countries, and of course, that's a big 'if,' . . . we can get crude oil prices down into the middle-$50s, which would enable gasoline prices to get back towards the $2 (per gallon range) or even slightly less," Matthews said. "I think that at least until sometime in the summer, we have a chance to see crude oil prices back down and gasoline prices dipping a bit in the next month or two."

And the underlying fundamentals seem to indicate that inflation is at least somewhat contained. Matthews pointed to the "core" inflation rate — which excludes the volatile food and energy indices — which has remained steady amid the energy-related price chaos.

"There isn't any indication that the core rate of inflation, which theoretically would be measuring whether or not these energy prices are being transferred or translated into the other parts of the economy, there isn't any indication that that is happening," Matthews said. "That is good news."

Locally, energy prices showed the only upward price movement among the 10 categories surveyed. The cost of groceries fell 0.9 percent in January, the Wells report found. Clothing costs dropped 2.2 percent. All other categories reported no change.