Over the last year, Fort Lewis College and the Region 9 Economic Development District of Southwest Colorado Inc., or Region 9 EDD, have combined resources to construct and maintain a consumer price index for Southwest Colorado.
In general, a consumer price index measures the rate at which the prices of consumer goods and services are changing over time. It is a key statistic for purposes of economic and social policymaking, and has substantial and wide-ranging implications for governments, businesses, workers and households.
The U.S. Bureau of Labor Statistics builds and maintains a consumer price index for the nation by monitoring the largest 87 urban areas in the country - the two nearest urban areas to Southwest Colorado monitored by the bureau are Denver and Phoenix. As Southwest Colorado offers a unique and diverse economic base, we believed it appropriate to develop a price index of our own.
Given the size, scope and resources required to build a reliable price index, we have developed a pared down and slightly altered version of the Bureau of Labor Statistics consumer price index, or CPI, and the ACCRA Cost of Living Index for Southwest Colorado.
Our CPI version will allow us to compare more closely with price changes in Denver and the nation, whereas the ACCRA index more accurately reflects true changes in living costs in Southwest Colorado. We have named our ACCRA-based index the Southwest Colorado Price Index, or SCPI, with our CPI equivalent the SCPI-CPI.
The Bureau of Labor Statistics gathers prices on more than 200 goods and services, whereas the ACCRA index gathers prices on more than 40 goods and services. Since the fourth quarter of 2008, we have collected prices on nearly 60 goods and services in the region. The main categories of our data collection include: groceries, housing, utilities, transportation, health care and miscellaneous.
Since late last year, our SCPI indicates the cost of living in the region has dropped 6.4 percent. Grocery costs have dropped 2.3 percent, housing rents have increased 4.3 percent, whereas monthly mortgage costs on a median-priced home have dropped
6.5 percent, utility expenses have dropped 20 percent, transportation expenses have dropped 25 percent, health-care costs have remained nearly flat at a 0.3 percent increase and miscellaneous goods and services have increased 2.4 percent.
Our SCPI-CPI (our SCPI adjusted to the Bureau of Labor of Statistics CPI) indicate the cost of living in the region has dropped 2 percent since late 2008 versus the national CPI dropping 1.5 percent and Denver falling 1.7 percent.
The nation's grocery tab has decreased 1.6 percent, housing rents have increased 0.9 percent, utilities have fallen
23 percent, transportation expenses have dropped 31 percent, health-care costs have increased 3.2 percent and miscellaneous goods and services have increased 1.6 percent.
Luke Miller is an assistant professor of business administration and
co-director of the Office of Economic Analysis and Business Research
at Fort Lewis College.