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INDEXES REALLY MONITOR COST OF CERTAIN GOODS, NOT TRUE COST OF LIVING

For the past 13 months Utahns have been reading about a local consumer price index published in the Deseret News the same day national figures are released.

But don't make the logical assumption that either set of numbers is what economists call it: A cost of living index.Given the factors that can't be quantified - such as taste, lifestyle and quality - it's practically impossible to come up with an accurate figure telling us how much it will cost an individual to live along the Wasatch Front, said local economist Kelly Matthews.

Matthews, chief economist and senior vice president of First Security Corp., which contracts with a New Jersey research firm to generate the local CPI, said the figure actually depicts the cost of a fixed group of 500 goods and services along the Wasatch Front.

While it is a more in-depth survey, the national index, compiled by the federal Bureau of Labor Statistics, isn't anything more.

"The Wasatch Front cost of living index is just a title and doesn't reflect a true cost of living any more than the national index," he told the monthly meeting of the Wasatch Front Economic Forum Wednesday.

So why go to the trouble of compiling the index?

"It can explain the overall welfare and standard of living in the state," Matthews said.

For example, the index can give some explanation as to why Utah's wages are 12 percent below the national average. Matthews explained that the state's flat inflation rate of less than 1 percent over the past 14 months, according to the local CPI, is well below the national rate of 6 percent, putting the state's "depressed" wages into perspective when compared to national salaries.

In comparing the Utah index with the national index, Matthews said, costs for housing, healthcare and clothing are below the national average, while prices for transportation, groceries and restaurants are the same as those paid by consumers in other states.

Only grocery prices, rising 9 percent in the past 14 months, ranked above national averages. The country's grocery index during the same period rose 8 percent.

The main reason the overall national inflation rate is higher than Utah's is housing costs, Matthews explained. He said housing costs are giving a higher weight nationally than locally. Also, local housing costs depicted in the CPI are basically rental rates - because it is difficult to separate out the costs of home ownership vs. costs of a real estate investment - which have declined along the Wasatch Front.