Friday, July 16, 2010

Prices up 0.1 percent in the West

Prices in the West, the region that includes Colorado, inched up 0.6 percent from June 2009 to June 2010. According to new Consumer Prince Index data, released today by the U.S. Department of Labor, Overall prices in the region advanced year over year, but fell 0.1 percent from May 2010 to June.

Transportation prices in the region increased the most, year-over-year, as prices increased 5.2 percent. Medical care posted the second largest increase at 3.4 percent. The largest drop in prices was found in housing as prices dropped 1.5 percent, year over year, and 0.2 percent since May 2010.

Nationally, price increases were slightly larger with the CPI's U.S. City Average up 1.1 percent overall, measured year over year. From May 2010 to June 2010, prices fell 0.1 percent. The CPI for housing was considerably more robust at the national level with housing down less than half as much as in the West with a drop of 0.6 percent. This is to be expected since the West, for the purposes of CPI data, includes states with real estate that has been hard hit by foreclosures such as California, Arizona, and Nevada.

Falling prices have been driven by generally weak demand for a wide variety of goods driven by stagnant wages and job losses across the nation and the region. This week, consumer confidence fell to the lowest levels seen since August 2009, reflecting continued concerns among consumers about economic conditions.

Housing prices, for example, have been driven by lackluster growth in both median home prices and in rents across much of the West and in Colorado.

The CPI measures price inflation or price deflation only, and does not directly reflect increases in the money supply.

The All Items Consumer Price Index for All Urban Consumers (CPI-U) for the West stood at 221.147 (1982-84=100). This means a market basket of goods and services that cost $100.00 in 1982-84 would have cost $221.14 2010.