Utah’s hot housing market and high inflation rate go hand in hand

SALT LAKE CITY — The national inflation rate may have hit a 40-year-high last month, but it was down in Utah by less than a half of a percent. Despite that decrease, however, Utah’s 9.4% inflation rate is still higher than the national rate of 8.6%.

University of Utah Economics Professor Dean Baker says that might be in large part because of the Utah housing market.

“Housing is a big component, about 30% of the overall consumer price index,” Baker told KSL NewsRadio. “What we’re seeing is that people are moving here because they can. They can work remotely and are moving from high-cost areas.

“That’s driving up prices here,” Baker said.

And he thinks the working from home trend in Utah and across the country will continue.

The nation’s inflation rate hit 8.6% in May. That was the highest increase since 1981.

Strong population and job growth are also factors in Utah’s high inflation rate. 

If people are holding their breath, hoping that housing and rental prices will go down – Baker said that’s not likely.

“I think Utah’s going to continue to see certainly more rapid house price growth, as well as rental growth than the rest of the country and maybe more rapid inflation growth in other areas,” Baker said. “But that (housing) being the biggest factor and the difference.”

Related:

• Utahns are paying more in inflation than other states
• Wholesale inflation impacting businesses all across Utah
• Rising interest rates put homes out of reach for 2 of 3 Utah families