Wasatch Front consumer prices rose more than the national average last month, but local analysts say there's likely little to fear from inflation.

In September, consumer prices on the Wasatch Front rose 0.7 percent, compared to 0.1 percent nationally (0.2 percent after seasonal adjustment), according to Wells Fargo Consumer Price Index and U.S. Bureau of Labor Statistics data released Thursday.

Analysts say lack of inflation has given Federal Reserve policymakers "room" to leave interest rates at a low that has been near zero since December, in order to boost the economy.

But Wells Fargo economist and executive vice president Kelly K. Matthews wondered during a news conference Thursday if the real story is the low inflation — the year-over-year rate is 1.5 percent below last year — or the fact that the U.S. dollar has declined. That decline is, "depending on how you calculate it, as much or more than 10 percent," he said, while crude oil cost is up and so is the price of gold, which tends to rise in tough economies.

That 0.2 percent increase nationally was about what analysts had expected.

Locally, increases occurred in the cost of transportation, medical care and education. Decreases were more modest and came in both food at home and away, housing, recreation and other goods and services. The cost of utilities and of clothing were unchanged.

Although the cost of food dropped slightly in September, the six-month average in 2009 was still 5.6 percent higher than the average for the same time last year, while nationally that average was down. In recent months, Matthews has questioned why Utah's food prices were rising faster than they were nationally.

Transportation costs rose 3.1 percent in September in Utah, the fourth consecutive month of increases, while nationally, it dropped 0.2 percent. Matthews said he believes that the increase in crude oil prices, at $75 to $76 a barrel Thursday, was more a sign of oil producers getting their money in the face of a weakened U.S. dollar than an indication that demand has increased and thus driven up prices. There is, he said, "clearly no evidence of inflation in the economy relating to demand."

The 3.1 percent jump in transportation costs came not from rising gas prices, but from increases in the cost of airfare and auto maintenance, Matthews said.

Still, the stock market indicates that "investors are moving from 'Will we have economic recovery?' to 'How strong will it be, and how long will it last?' " said Chris H. Neddo, portfolio manager at Wells Capital Management.

He sees rising confidence levels and what appears to be a "bottoming" in the housing and automaker sectors, as well as signs of global recovery, which all indicate economic recovery coming locally. "Are we on the mend? …The answer to that is yes," he said.

But he also noted that the enthusiasm about the Dow rising above the 10,000 level is mostly psychological. "It's the 50th time we've hit it" coming and going, he said.

Matthews believes "stagflation" is more likely than inflation, "where we have disappointing growth." If the dollar remains weak and long-term interest rates edge up, housing recovery could be damaged.

While the lack of inflation has been widely hailed as good news, it also means that senior citizens and others receiving Social Security and other benefits will not get a cost-of-living increase. President Barack Obama has proposed a one-time payment to them of $250, which would cost about $13 billion.

Contributing: Associated Press