Fuel bumped Utah cost of living in June, but economists say inflation not a concern

The Utah and national economies continue to falter, but at least consumers don't have to worry about rising prices.

The cost of living along the Wasatch Front rose 0.2 percent in June, but it's an increase that almost entirely reflects last month's jump in gasoline prices, which have since declined.

And with no major increases in the cost of goods in other sectors, inflation remains under control locally, according to Wells Fargo & Co.'s Consumer Price Index.

Nationally, the story is much the same, although more pronounced. U.S. consumer prices jumped in June by the largest amount in 11 months, but that increase was mostly tied to the largest monthly increase in pump prices in nearly five years.

The

Commerce Department said consumer prices rose by a seasonally adjusted 0.7 percent last month, slightly higher than the 0.6 percent economists had predicted. In fact, it was the biggest one-month gain since the same percentage increase last July.

Yet over the past year, U.S. consumer prices have declined by 1.4 percent, the biggest year-over-year decline in nearly six decades. Along the Wasatch Front, the year-over-year decline is estimated at 0.9 percent.

Consumers locally say they have snapped up all kinds of deals as recession-weary retailers try to lure customers with deals.

Stacey Gates of Riverton, author of the Whyusecoupons.blogspot.com, said her pantry and freezer are stocked with free or nearly free food she has accumulated using grocery store sales, coupons, rebates and other promotions. "I have never been able to get so much free stuff," she said.

Albertsons has been staging a promotion that doubles the face value of manufacturer's coupons, up to two or three in each transaction.

And Smith's this week had a coupon in the Sunday newspaper for gallons of milk priced at 99 cents. Shoppers have been combining those store coupons with 75 cents-off "manufacturer's" coupons from the Idaho Dairy Council available at Coupons.com to get gallons of milk for 24 cents each.

"I've never seen coupons like those before," Gates said.

She said department and apparel store sales also have been stellar lately, referencing $1 T-shirts and flip-flops at Old Navy and coupons good for $10 off $20 purchases at Kohls. The coupons were good on sale and clearance items, as well as regularly priced merchandise.

Why are the deals so good in food and other areas? Economists in Utah and other parts of the country say they aren't worried about inflation, chiefly because the national recession has dampened global consumer spending. Most companies in this environment simply cannot raise prices without risking a sizable drop-off in demand and/or sales. Even gasoline prices in bad times can only rise so much.

Salt Lake City economist Jeff Thredgold, a consultant to Zions Bank, predicts that gasoline prices will come down a bit more in the next couple of weeks. Other sources, such as travel services agency AAA Utah, predict gasoline prices may edge upward, but only slightly.

Thredgold said inflation in general -- for the rest of this year and likely through 2010 -- isn't going to be a problem.

The Associated Press contributed to this story.