It’s summer and like every year at this time, the cost of travel-related activities like flying and staying in hotels is up. Combine that with a continuing skyrocketing gasoline price and high rent and it’s costing more to live in Utah.
The Zions Bank Wasatch Front Consumer Price Index (CPI) increased a relatively significant 1.5 percent from April to May. Since this time last year, the CPI has grown 5 percent, the largest annual increase since the index began in 2010. During the same time frame, the national Consumer Price Index has increased 2.8 percent.
Rising prices within the Utah housing and transportation sectors continue to drive the majority of the increase in overall cost of living. Increases in the cost of airfare, vehicle rentals and gasoline drove increases in the transportation sector, while rising hotel and motel rates, combined with seasonal increases in apartment rates, had the largest impact on housing prices. Summer utility price increases are also pushing the index upward.
“Summer is a common time for prices to increase,” said Scott Anderson, president and CEO of Zions Bank. “Real estate and apartment owners tend to increase prices around May as they prepare for the increase in moving that comes with summer. And consumers tend to buy more gasoline during the vacation season, with many people traveling by plane and car.”
Due to the price increases, Utahns are spending an increasing proportion of their incomes — 55.6 percent — on housing and transportation. This is the highest proportion spent on these categories in the history of the CPI. Medical care price increases — mostly for prescription drugs — also fueled the overall upward movement of the index.
“Though national and global market supply factors drive increases to gasoline prices, rising housing prices are due more to local economic factors,” said Randy Shumway, chairman and partner at Cicero Group, a Salt Lake City market research firm that does data collection and analysis for the CPI. “Demand for Utah’s housing is growing because of both population growth and people coming to Utah for work and education. Presently, even though residential construction is quite strong, demand has grown faster than supply.”