Cost of living drops slightly

The cost of living along the Wasatch Front fell slightly in December, but food prices crept up — and the increase at the grocery checkstand over the past 10 months is nearly three times the national average.

According to the Wells Fargo Consumer Price Index and numbers released Friday by the U.S. Bureau of Labor Statistics, overall local prices fell in lockstep with national numbers. The Wasatch Front saw a 1.2 percent decrease in December, while the nation averaged a 1 percent drop — a 0.7 decline after seasonal adjustment.

Locally, half the categories tracked saw one-month price breaks for consumers, from a modest 0.2 percent decline in recreation costs to a 6.9 percent decrease in transportation costs, driven largely by a decline in fuel costs. Nationally, transportation dropped 5.2 percent in December. It is down 13.5 percent over 10 months, compared to a 17.7 percent decrease on the Wasatch Front.

There is no evidence yet that the drop in energy and commodity prices is spreading to consumer prices in general locally, though, said Kelly K. Matthews, executive vice president and economist at Wells Fargo. And he noted that actual inflation on the Wasatch Front was closer to the national 4 percent increase from December 2007 to December 2008 than to the 0.2 percent decline the charts showed when it was calculated over 10 months. It's a difference in how local and national numbers are reported right now. "We can't make that analysis on local until we have two years," he said.

In the last couple of weeks, Matthews said, gasoline prices have been inching up at the pump, but that's not likely to last. Crude oil prices in mid-December were in the low $30s. Fighting in Gaza, cold weather and other world events drove the crude price up to almost $50 a barrel, while locally gas rose about 20 cents a gallon at the pump. Now the crude oil price is back down nearly to mid-December's rate, and "my guess is it will adjust" back down at the pump, he said. Consumer demand remains "weak."

Groceries are a different matter. While the increase over 10 months nationally was 4.8 percent, grocery prices rose 12.9 percent on the Wasatch Front. "I'm not sure why," Matthews said, although he noted that fish and pork prices had risen. There "isn't anything I'm aware of that suggests grocery prices should be higher."

Recent declines in the fixed mortgage interest rate to below 5 percent and price decreases for housing, combined with new national stimulus efforts may be enough to create a mid-year improvement in the housing market, Matthews said, including seeing a "few houses being built" in the second half of 2009.

Typically, in previous downturns, the stock market has bottomed out and started to climb about six months before the bottom was reached in the job market cycle, according to Sterling K. Jenson, regional managing director of client services for Wells Capital Management. He predicted the stock market will begin to recover "rather rapidly" if Americans can get over their "crisis of confidence created by politicians." After April, he predicted, the Dow would again be above 10,000 and he described the job market as "still dire, but on an improving trend."

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