Prices dip along Wasatch Front

Despite an increase in health-care costs in October, the overall Consumer Price Index along the Wasatch Front was down 0.3 percent that month, according to Wells Fargo and U.S. Bureau of Labor Statistics data released Wednesday.

Prices were rising ever-so-slightly nationally, with an increase of 0.1 percent, or 0.3 percent after seasonal adjustment. Year-over-year, however, the cost is down 1.3 percent, compared with 1.6 percent locally.

The data pose a "perplexing" question, said Kelly K. Matthews, chief economist for Wells Fargo. Would it actually be beneficial if inflation were stronger, assuming such inflation showed an increase in demand? He said he's puzzled whether the focus should be on lower prices or on what's happening with gold — it's priced very high — or the American dollar, which is slipping against the euro.

Normally, those factors would trigger inflation worries, especially if combined with higher long-term interest rates. But there's no sign of the latter at this point, he said, and when those who set federal interest rate policy recently met, they gave no indication they're ready to raise rates. There's also no indication that demand's growing enough to move the inflation needle, either.

"I would hope the dollar doesn't weaken enough to push oil into the $80s," Matthews said.

Local price increases in October included the cost of food away from home and recreation, as well as medical care, which was the largest increase at 3.5 percent, driven primarily by an increased cost for office visits. Many more prices fell than rose, with decreases in the cost of food at home, housing, utilities, clothing, transportation and other goods and services.

A statement by Cicero, which provides the Wasatch Front data, and Wells Fargo noted that "the increase in October price levels was not realized yet again this month as the beginning of the school year is past and clothing prices have seen a seasonal decrease. Also, electricity dropped to a winter rate while natural gas rates have yet to change seasons."

Although the overall index is down, when you take out food and energy, there is modest inflation, with about 1.7 percent increases, Matthews said.

The report began in February 2008 and since then the overall cost of living in Utah has increased 2.6 percent, compared to a 2.1 percent increase nationally.