Rising prices for food, gas and even clothing are partly responsible for a 1 percent rise in the cost of living along the Wasatch Front in March.
A Wells Fargo Consumer Price Index report released Wednesday shows that the local consumer price index slightly outpaced the national increase of 0.9 percent. Nationally, when the numbers are seasonally adjusted, consumer prices rose 0.3 percent in March, after being unchanged in February.
The increases came as energy prices jumped by 1.9 percent and airline fares, reflecting higher fuel costs, increased 3 percent, the biggest one-month gain in six years.
The Wasatch Front's overall 1 percent rise, which is not seasonally adjusted, mirrors the West's 1 percent increase in consumer prices issued by the U.S. Bureau of Labor Statistics.
The Wasatch Front report shows a 3 percent rise in the cost of groceries, and a 0.9 percent rise in transportation costs, largely fueled by the price of oil and the declining value of the dollar.
"Rising commodity prices...combined with the weakness of the dollar...(are) not going to rectify easily or quickly," said Kelly Matthews, Wells Fargo executive vice president and economist.
Oil prices hit a record $115 a barrel Wednesday. At the same time, a gallon of gas cost Utahns an average $3.32, up 12 cents from a month ago and 41 cents from last year, according to AAA.
Matthews projected a gallon of gas in Utah could rise to around $3.50 during the high-demand summer driving months.
The cost of clothes rose a whopping 6.5 percent for the Wasatch Front. But Matthews attributes that to temporary price volatility. Nationally, prices rose 2.6 percent for the month but are down 0.2 percent in the past year.
The cost of other goods and services rose 1.2 percent for the Wasatch Front. Nationally, those prices are up 0.5 percent for March and 3.4 percent for the year.
Housing costs went up 0.7 percent, driven primarily by rising prices of household appliances, the report states. Nationally, housing cost 0.6 percent more for the month and 3.1 percent over the past year, the report states.
Those inflation pressures are occurring just as the economy seems to be sinking into a recession, with consumers cutting back on spending and the housing industry, where all the troubles started, sinking further.
That was the somber news from a batch of economic reports released Wednesday that depicted an economy still struggling with multiple problems from a prolonged slump in housing, soaring energy prices, a severe credit crisis and rising unemployment.
The Labor Department said said food prices have been steadily rising for more than a year, increasing 4.4 percent over the past 12 months. The price of some food staples showed even bigger increases over the past year, including a 14.7 percent rise in the price of bread and a 13.3 percent increase in milk prices over the past year.
With the rising oil costs, food prices remain under pressure because of global shortages.
"People are going to be paying a lot more for gasoline and groceries in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com.
Wall Street ignored all the bad economic data and instead focused on better-than-expected quarterly results from JPMorgan Chase and two other companies to send stocks higher. The Dow Jones industrial average rose 256.80 points Wednesday to close at 12,619.27.
Zandi said the rise in food and fuel prices has been a significant drain on consumers' purchasing power, another reason he and other analysts believe the country has fallen into a recession. Consumer spending accounts for two-thirds of economic activity.
While the Bush administration is hoping that economic stimulus checks being mailed to households starting next month will make any slump short and mild, Zandi said the $100 billion in payments consumers will get this year will be just enough to offset their higher gasoline bills, leaving nothing left to boost consumer spending in other areas.
In its latest look at business activity around the country, the Federal Reserve said Wednesday that "economic conditions have weakened," citing sluggish consumer spending and rising costs to businesses for raw materials.
Many analysts expect the Fed, which has been aggressively cutting interest rates and shoveling money into the banking system to combat the credit squeeze, will cut rates again when officials next meet on April 29-30.The housing industry, where the troubles began two years ago, remained under severe strain with construction of new homes and apartments plunging by 11.9 percent in March, the Commerce Department reported, double what had been expected, to a seasonally adjusted annual rate of 947,000 units, the slowest pace in 17 years.
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