Consumer price increases in Utah continue to run ahead of the national average and housing continues to be the main culprit. The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.4 percent from December to January. Year-over-year, the Wasatch Front Consumer Price Index has grown 3.3 percent, while the national Consumer Price Index has increased 2.1 percent since January of last year.
Rising housing prices caused the majority of the year-over-year cost of living increases in January, as statewide housing demand continues to outweigh supply.
Prices within the economy have remained relatively stable in recent months, which is a good sign, analysts say. Utah has registered inflation above 3 percent since May 2017. Inflation within the state has been largely driven by price increases in the housing, transportation and education sectors.
According to a study published last year by the Kem C. Gardner Policy Institute, from 2010 to 2015, the total number of households within the state increased by 109,321 while the total number of housing units only increased by 81,656. The study also noted that for the first time in 40 years, households are growing at a faster pace than housing units. The Utah housing shortage has most likely been caused by Utah’s population growth as well as the state’s robust job market, which has attracted thousands of highly skilled laborers to the state.
“Utah’s business-friendly public policy has led to significant job growth within the state,” said Scott Anderson, Zions Bank president and CEO. “As Utah businesses continue to expand, Utahns will continue to see labor wage growth, which will help to combat statewide cost of living increases.”
Although prices in most sectors of the economy remained relatively unchanged from December, in addition to housing, Utah saw slight price increases in the following sectors:
• Transportation prices increased 2 percent as car insurance rates increased significantly in January.
• Utilities prices increased 0.8 percent in January as propane and fuel prices increased slightly.
Price increases were largely offset by price decreases in the following sectors:
• Medical care prices decreased 2 percent as prices for prescription drugs decreased slightly in January.
• Prices for other goods and services decreased 0.5 percent as hygiene product prices decreased slightly.
“Economic growth within the housing sector is a result of Utah’s robust economy,” said Randy Shumway, chairman and partner at Cicero Group, which does data collection and analysis for the CPI. “As housing demand has exceeded supply, we have seen price growth in the sector. Over the long term, continued population and job growth will continue to drive residential construction, which has an overall growth effect on the statewide economy.”