While inflation remained well-behaved along the Wasatch Front last month, a spike in national numbers kerfuffled analysts and economists Wednesday.
Wells Fargo Bank reported in its monthly Wasatch Front Cost of Living Index that inflation crept up 0.1 percent on a non-seasonally adjusted basis in March, led by a 0.3 percent bump in transportation costs and 0.2 percent increases in the costs of clothing and groceries.
Meanwhile, the U.S. Labor Department released more alarming data in the form of its Consumer Price Index, which rose 0.4 percent (on a seasonally-adjusted basis) in March — the biggest amount the nation has seen in a year, and eclipsing February's modest 0.1 percent gain.
The federal inflation meter, like the local one, was pulled higher by gasoline prices, which the Labor Department said jumped 3.5 percent.
Core inflation, which excludes the more volatile food and energy categories, posted a 0.3 percent rise in March.
Analysts' reactions to the report were mixed.
"Any way you cut it, inflation was not well contained in March," said Joel Naroff, chief economist for Naroff Economic Advisors, a private consulting firm. "This was not a good report, especially if you are a member" of the Federal Reserve committee that meets eight times a year to set interest rates. The next meeting is May 10.
However, Kelly K. Matthews, executive vice president and economist for Wells Fargo, said that while the jump in core inflation was "the highest monthly number in literally five years in terms of the change in the monthly core basis," a broader analysis lent some perspective to the situation.
"Even though it was 0.3 (percent higher) for the month," Matthews said, "on a year-to-year basis it remained 2.1 percent core inflation, which was pretty much consistent with where the core rate of inflation on a year-to-year basis has continued. So there wasn't really any big jump on a year-to-year basis, and the 2.1 percent is still pretty much on the upper end of what's called the 'acceptable range,' from the Fed's point of view."
Others worried that the core inflation data could be a worrisome signal that higher energy prices are starting to spill over into more widespread inflation pressures.
"Today's report provides a signal, albeit noisy, that the long-awaited pass-through of higher costs to a wide range of consumer prices has arrived," said Kenneth Beauchemin, an economist at Global Insight, a forecasting firm.
Through the first three months of this year, overall inflation has risen at a 4.3 percent annual rate, far above the 3.4 percent price increase for all of 2005. Energy prices are up 21.8 percent at an annual rate through March, compared with a 17.1 percent rise for all of 2005.
"There continue to be some factors out there other than basic supply and demand for crude (oil) and for gasoline that are affecting the price," Matthews said. "Whether I can tell you that it's going to remain stable or keep going up, to some degree that's anyone's guess."
The price of light sweet crude for May delivery closed at $72.17 a barrel on the New York Mercantile Exchange Wednesday, an increase of 82 cents from the previous day. Oil futures contracts through July 2009 are now trading above $70 a barrel.
"Nothing in today's data indicates that continued pressure on gasoline prices will be abated," Matthews said. "More than likely we'll continue to see pressure on gasoline prices."
Stock prices edged lower on Wednesday, one day after investors had pushed the Dow Jones industrial average up 194.99 points. The biggest gain in a year coincided with the release of Fed minutes from the March meeting that indicated the central bank soon could halt its long string of rate increases.
"Could" being the operative word, according to Matthews.
"To say that the Fed is absolutely finished tightening may be a little bit of hopefulness rather than absolute certainty at this point in time," Matthews said.
Still, Bonnie B. Newman, a relationship manager with Wells Capital Management in Salt Lake City, said Wells remains bullish about the market in 2006, which she said is supported by strong corporate earnings, a global economic recovery led by emerging markets and, at least so far, relatively low inflation.
"Since the recession lows of 2002, the S&P 500 is up over 65 percent, and that's even in the face of rising short-term interest rates," Newman said. "The equity markets continue to rise and continue to post good gains."
The Dow rose a modest 10 points Wednesday to close at 11,278.77.
E-mail: jnii@desnews.com