Vegas cost of living up in 1996

Wednesday, Jan. 15, 1997 | 11:59 a.m.

The Las Vegas housing market, a gold mine for developers aiming to keep pace with the booming gaming industry, was a key contributor to rising costs in Southern Nevada for the year.

The Las Vegas cost of living index increased by 4.5 percent in 1996 over the previous year, a study by First Security Bank said.

Nationally, consumer prices climbed 3.3 percent for 1996, the biggest gain in six years.

First Security Bank chief economist Kelly Matthews said consumer prices fell 0.4 percent in December in Southern Nevada, the first decrease in four months. Nationally, December prices were unchanged during the period, according to a report issued Tuesday. Statistics were not seasonally adjusted.

A spokeswoman for the Salt Lake City-based bank said the annual increase in cost of living for Las Vegas outpaced other cities analyzed by First Security. She said costs were up 3.9 percent for the year in Salt Lake City, 2.3 percent in Boise, Idaho, and 1.8 percent in Albuquerque, N.M.

Housing costs -- based on a weighted formula of rentals, home maintenance costs and home insurance rates -- were the biggest factor in the overall increase. The spokeswoman said because the Southern Nevada market has remained hot, the demand has driven up the costs of homes, rents and maintenance.

Other big increases occurred in the categories of health care and groceries, both up 10 percent in 1996. Those categories aren't weighted as high as housing to determine the overall cost of living. The First Security formula is weighted to reflect spending patterns in an average family budget.

For the month of December, prices were down in three categories, up in three and unchanged in two.

Prices were lower for transportation, housing and eating out. They were higher for clothing, groceries and health care. Miscellaneous expenses and utility costs stayed at the same level.

The First Security monthly report said transportation costs were down 2.04 percent with lower automobile insurance premiums offsetting higher gasoline prices.

Housing costs were down 1.09 percent, reversing a two-month trend. Maintenance costs were up, but home insurance rates were down.

The cost of eating out in Las Vegas broke a two-month upward trend with lower costs on vegetable plates and main dishes prepared with chicken reversing earlier trends. Those offset higher prices for seafood dishes, dairy products and main courses prepared with beef.

Clothing costs were higher in December with bigger price tags on menswear and women's apparel offsetting decreases in children's articles and maintenance costs.

Grocery costs were up 1.79 percent with decreases in meat offsetting increases in produce, shelf items and alcoholic beverages.

Produce prices increased 3.7 percent for the month with tomatoes up 26.4 percent and carrots up 15.8 percent while the prices of cucumbers were down 26.5 percent, cabbage, 14.6 percent and oranges, 9.7 percent.

Following a month of decline, alcoholic beverages increased 2.2 percent with beer up 2.4 percent and wine up 2 percent.

Meat prices fell overall for the month, but flour, rice, coffee, ice cream and sugar were up.

Health-care prices increased 0.17 percent following two months of declines. A third consecutive month of lower costs for dental care were offset by increases in non-prescription drugs, hospital care and doctor bills.

Utility bills, which have fallen 6.6 percent over the nearly three-year life of the First Security report, were stable in December following a decline in November.

Nationally, the Commerce Department said overall prices posted a fourth straight 0.3 percent seasonally adjusted increase, reflecting a big jump in energy costs. But outside food and energy, the core inflation rate posted a tiny 0.1 percent gain.

Analysts said as long as the pattern holds, the Federal Reserve is unlikely to feel compelled to start raising interest rates to fight inflationary pressures.

However, economists have already begun to worry about how long higher energy costs in particular will remain contained since energy is such a big factor in manufacturing and transportation costs.

For all of 1996, the 3.3 percent rise in the Consumer Price Index was the biggest increase since a 6.1 percent jump in 1990, a sharp increase that also reflected higher energy costs.

Since that time, Americans have enjoyed a remarkable period of stable prices. The 2.5 percent price increase in 1995 had marked the fourth straight year that inflation was below 3 percent, a performance not equalled since the mid-1960s.