Higher interest rates on mortgages have joined soaring gas prices as the culprits raising the cost of living for Utahns. The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 1.9 percent from March to April. Year-over-year, the CPUI is up 3.9 percent, while the national Consumer Price Index has increased 2.5 percent since April of last year.
The increase to the statewide cost of living has been driven mostly by growth in prices in the housing and transportation sectors. Beside interest rates, a tight housing market has increased the cost of apartment rentals.
Huge rises in gas prices have been another cause of price increases in April. Gas prices rose nearly 50 cents a gallon from March to April, the highest month-to-month increase in Utah in the past three years. Together, housing and gasoline price increases account for over 90 percent of the month-over-month rise in the overall CPI.
Other price increases were seen in medical care costs and in the costs of recreation. Medical care costs rose 1.9 percent from March to April, while recreation costs grew 0.6 percent during that time frame.
The annualized inflation rate of 3.9 percent is the highest year-over-year increase seen since September 2012. Though due largely to the sharp jump in gasoline prices combined with rising housing prices, some of the annual increase can also be attributed to rising education costs such as tuition and fees.
“As more and more people move to Utah, the demand for housing increases,” said Scott Anderson, president and CEO of Zions Bank. “The robust economy and job market in Utah keeps drawing people here. If wages in Utah can keep pace, then the value of homes will continue to grow in the long term. In the short term, it looks like housing costs are going to keep inching up.”
“Seasonal demand for gas only partially explains the change in gas prices,” 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. “Supply-side factors, such as cuts in production decided by OPEC, are continuing to take effect. We will also have to wait and see how recent developments with regards to Iran will impact oil prices. Reapplied sanctions may also affect global oil supplies.”