Cost of Living Declines in December

Cost of Living Declines in December

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SALT LAKE CITY (AP) -- The cost of living along the Wasatch Front continued its slide in December, following declines in housing, transportation, grocery and clothing prices.

The Wells Fargo Cost of Living Index fell 0.3 percent over the previous month. The monthly index tracks the weighted average of 10 spending categories in a typical family budget.

From July to December, the overall cost of living along the Wasatch Front increased just 1 percent compared to the same period a year earlier. That has raised some concerns over deflation, a decline in the prices of goods and services that hurt output and employment.

"The local economy could use some price hikes right now, as this would indicate both renewed consumer demand and suppliers' improved pricing power," said Kelly Matthews, Wells Fargo executive vice president and economist.

Local and national economists have predicted that business investment likely will pick up in the second half of 2003. However, those gains may be offset by a drop-off in consumer spending brought about by high debt loads.

That could further lead to continued weak demand, making it difficult for businesses to raise prices.

In Utah, price declines hit gasoline pumps, men's and women's clothing apparel and food items like cereals, dairy products and beverages. Housing prices showed a 0.3 percent fall over November.

Nationally, the cost of living barely increased by 0.1 percent on a seasonally adjusted basis over the previous month, according to the Labor Department.

Across the country, the price of household furnishings, apparel, new vehicles and lodging away from home all showed slight declines in December.

Gasoline prices decreased 1.4 percent in December, but were 24.8 percent higher than in December 2001.

Medical care, recreation and food and beverages costs all showed gains, the Labor Department said. Airline fares increased 0.4 percent in December, but were 2.4 percent lower than a year ago.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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