Utah consumer prices dipped in August

The Consumer Price Index along the Wasatch Front dropped slightly last month, while it was climbing a little bit nationally.

Overall prices dropped 0.1 percent locally and rose 0.2 percent nationally, according to the Wells Fargo CPI and the U.S. Bureau of Labor Statistics, which released the numbers Wednesday. When the numbers were seasonally adjusted, there was a national 0.4 percent increase.

"There's very little, if any, inflation evident in Utah or the nation," said Wells Fargo economist Kelly K. Matthews, adding that indications are that "much of the economy other than the labor market may have hit bottom."

As part of the report, the experts predict that more Utah jobs will be lost into the second quarter of 2010 and perhaps throughout the entire year. By the end of July, Utah had lost more than 52,000 jobs, compared with the year before, and unemployment was at 6 percent.

As the economy improves, companies are at first likely to meet any increased demand by asking for more productivity from workers, rather than hiring, Matthews said.

Employment is typically a "lagging" indicator, and predicted growth for 2010 is very modest, at around 2 percent.

But Sterling Jenson, regional managing director of client services for Wells Capital Management, took a brighter view, saying he expects the recovery to be faster and more upward than expected.

While Utah food prices have been rising faster than in the rest of the nation, they took a break in August, with local grocery prices down 1.9 percent. That was still 6.8 percent higher than the average for six months, when you compare 2009 to 2008. Grocery prices were flat nationally in August, but were only 1 percent above last year.

Matthews has repeatedly called it a mystery why Utah food-price increases have been outpacing national averages.

Transportation costs, particularly gasoline, were up 1.3 percent in August. But those costs were down 15.1 percent compared with the same six-month period in 2008. Nationally, the costs increased a more modest 0.9 percent in August and were down 13.1 percent in the year-over-year comparison.

The price of crude oil held steady for the fourth consecutive month at around $70 a barrel — something Matthews doesn't expect will change much in the near term. With driving decreasing in winter, there won't be pressure from demand, he said, but it's unlikely that the Organization of Petroleum Exporting Countries will let the price dip much, either.

Overall, increases in the cost of housing, utilities, transportation, recreation and other goods and services were countered by decreases in food at home and food away, clothing, medical care (driven primarily by lower pharmaceutical and eye-care costs) and education and communication.

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