Cost of living rises 0.4%

The cost of living along the Wasatch Front rose 0.4 percent in May on a nonseasonally adjusted basis, the sixth consecutive monthly increase, according to a report Wednesday by Wells Fargo.

In the past six months, the cost of things like groceries, utilities, clothing and gasoline along the Wasatch Front increased 1.4 percent.

But Kelly Matthews, executive vice president and economist for Wells Fargo, does not believe the increases are cause for alarm.

"Looking at past inflationary problems, it is pretty darn hard to conclude that we really do have an inflationary problem," Matthews said. "In fact, the pain that we feel at the gasoline pump, if we're a typical consumer across the United States, it only amounts to 4.1 percent of our budget."

In May, transportation costs — which include gasoline costs — along the Wasatch Front rose 1.7 percent over the prior month, the report said. Grocery expenses were down 0.3 percent. The remaining Wasatch Front price segments — housing, health care, clothing, food away from home, utilities, education and communications, recreation and other goods and services — showed no change.

Inflationary fears are sure to bring another hike in the federal funds rate by the Federal Reserve when it meets later this month, Matthews predicted. In May, the Fed raised the federal funds rate a quarter percentage point to 5 percent, the highest level in five years.

Matthews said crude oil prices in recent days have dropped, possibly due to promising U.S. negotiations over Iran's nuclear program.

"In addition, the energy data today indicated that for the seventh consecutive week, gasoline stocks have continued to increase," Matthews said. "We are now with gasoline stocks in the United States only 1.2 percent below where we were a year ago, which, of course, was before the whole Katrina incident. Even more importantly, refining capacity is now up to 92.7 percent of capacity, which is the highest its been since Katrina."

The Labor Department reported Wednesday that its Consumer Price Index rose 0.4 percent in May after an even bigger 0.6 percent rise in April, according to an Associated Press story. Gasoline prices jumped by 4.9 percent and have been soaring this year at an annual rate of 69.4 percent, as motorists contend with pump prices above $3 per gallon in many parts of the country.

Wall Street, however, greeted the latest report with relief, because it did not paint an even worse picture on inflation. Much of the rise in nonenergy costs was blamed on a statistical quirk in how the government measures shelter costs.