Prices rose another 1 percent and across the Wasatch Front and nationally in June — the second fastest pace recorded nationally in 26 years — mainly because of rising energy costs, according to local and national reports released today.

However, Salt Lake City Wells Fargo economist Kelly Matthews said a drop oil prices over the past few days brings a glimmer of hope for the future.

Gas prices jumped 8 percent between May and June. "That's clearly the big story," Matthews said in issuing Wells Fargo's Wasatch Front consumer price index. Overall, transportation prices went up 4.3 percent locally and 3.2 percent nationally, according to the report, whose numbers are non-seasonally adjusted.

Over the past four months, transportation prices have risen 10.6 percent locally and 11.3 percent nationally, the report states.

Nationally, the June increases are worse than the Labor Department expected. Energy prices shot up 6.6 percent, reflecting big gains for gasoline, home heating oil and natural gas.

But Matthews sees some potentially good news. The price of crude oil, though it's been above $140 per barrel, has not risen above $150 per barrel. In fact, it's retreated by about $10 in the past few days. If that trend continues, then inflation might slow in July, he said.

Gas prices also are largely to blame an increase in the price of groceries. Basically, it costs more to truck goods to stores. Groceries locally went up 1.3 percent in June — double the national increase. However, the four-month increase of 2.7 percent is closer to the national rate of 2.3 percent.

Health care along the Wasatch Front was flat for June, but up 3.1 percent over the past four months, versus a half-percent national increase.

The Wells Fargo index is not seasonally adjusted. That partly accounts for the 4.7 percent decrease in clothing costs locally. In May, those costs jumped 12.4 percent. The cumulative change over the past four months is a 9.7 percent increase locally, versus a nearly 1 percent drop nationwide.

Looking at seasonally adjusted national numbers, the 1.1 percent overall June price increase was the second largest monthly advance in the past 26 years, surpassed only by a 1.3 percent gain in September 2005 from a jolt to energy costs after Hurricane Katrina.

The big rise in prices cut deeply into consumers' earning power with average weekly wages, after adjusting for inflation, falling by 0.9 percent. It was the biggest monthly decline since a 1.1 percent drop in weekly wages in September 2005.

On the other hand, the Federal Reserve reported that industrial output rose 0.5 percent in June, the fastest pace in 11 months. Yet the increase, the highest since a 0.6 percent gain in July of last year, reflected an end to an automotive production strike, rather than any widespread strength in the economy.

Federal Reserve Chairman Ben Bernanke, wrapping up two days of congressional testimony, repeated his concerns about inflation in remarks to the House Financial Services Committee today. He said that the upside risks to the inflation outlook have intensified, reflecting higher prices for oil and other commodities.

Bernanke's comments underscored the bind the central bank is in, caught between a faltering economy that is struggling to overcome a prolonged housing slump and a severe credit squeeze, and the risk that inflation will move higher.

Democrats in Congress said the new inflation report emphasized the need to pass a second stimulus package. The White House, though indicating concern about the economy's weakness, has opposed it.

Certainly today's situation isn't good. But Wells Capital Management regional managing director Sterling Jenson says there's some evidence that things aren't as bad as some think.

Consumer sentiment is below 1982 levels, although the country is not in recession as it was then, Jenson said. The gross domestic product is not in negative territory. Productivity actually is up. And a few companies, including Wells Fargo, executives pointed out, show second-quarter earnings at or exceeding expectations.

In all, this might be a good time investors. "The best time to invest in the stock market is when no one else wants to be there," Jenson said. While it's uncertain if the market has hit its bottom, it's probably getting pretty close, he said.


E-mail: jtcook@desnews.com