The current rate of inflation is seen as short-term and will likely subdue in the long-run, having little impact on future economic growth. —Randy Shumway, chief executive officer of The Cicero Group
SALT LAKE CITY — Northern Utah consumers' belief in the local economy remained positive in March.
The Zions Bank Wasatch Front Consumer Price Index increased 1.1 percent last month, slightly ahead of the U.S. CPI, which rose 0.8 percent on a non-seasonally adjusted basis. Year-over-year, the Zions Bank CPI has seen local inflation rise 2.7 percent — the same as the national rate.
Gasoline prices drive almost 80 percent of March's spike in inflation, the report states. Crude oil, which accounts for 76 percent of the price of gasoline, has risen approximately 9 percent since December 2011. In March of last year, the Wasatch Front experienced a similar jump in inflation, again driven largely by gasoline prices, the report said.
"Twelve months ago, the surge in fuel prices closed wallets, decelerated investments and challenged the state's recovery," said Randy Shumway, chief executive officer of The Cicero Group. "Today, the economy's fundamentals have since strengthened in key areas, such as employment, consumer spending and confidence."
The latest consumer confidence data (local and national) reveal that higher prices at the pump have not changed consumer behavior, he said. Historically, higher fuel costs equate to drops in confidence. However, with the flow of positive economic data, it is difficult to speculate the degree to which higher gasoline prices will adversely affect the local economy, he added.
In March, the cost of transportation along the Wasatch Front increased 5.2 percent, the largest single month increase ever recorded by the Zions Bank CPI — driven primarily by gasoline prices, which climbed 16 percent.
Despite the significant increase in fuel costs, Utah remains the third cheapest state for gasoline in the nation, according to AAA, with the average price of regular gasoline in the state at $3.72 per gallon.
Meanwhile, the cost of utilities jumped 1.1 percent last month due to increases in the price of propane and gas, the report states. Year-over-year, utilities have increased about 6.4 percent along the Wasatch Front with March's increase attributable mostly to seasonal adjustments in price.
"It is important to remember that March's inflation is the result of higher gasoline costs and is not indicative of general price increases," Shumway said. "As a result, the current rate of inflation is seen as short-term and will likely subdue in the long run, having little impact on future economic growth."