May 2012 Municipal Cost Index shows modest increase

Last month, the overall costs of goods and services purchased by local governments increased 0.5 percent for the second straight month, according to American City & County’s Municipal Cost Index. The May 2012 Municipal Cost Index value of 226.2 is 1.1 percent higher than January, and 2.6 percent higher than last year.

None of the items tracked by American City & County showed large price increases in the last month, but of the items that increased slightly, many are related to construction. The largest increase was seen in gypsum products, which rose 2.2 percent in one month and is 9.1 percent higher than last year. Plywood increased 2 percent, air conditioning equipment and synthetic fibers both increased 1.8 percent, and prepared paint increased 1.1 percent. Prepared paint is up 9.1 percent over last year.

Once again, fuel showed the greatest price decreases in the last month among the items tracked by American City & County. Crude petroleum was down 11.2 percent, and diesel fuel (No. 2) dropped 6.3 percent last month. Natural gas was down 8.3 percent in the last month and has dropped 36.5 percent since last year, which is the greatest annual decrease among items tracked by American City & County.

The Municipal Cost Index, developed exclusively by American City & County, is designed to show the effects of inflation on the cost of providing municipal services. State and local government officials rely on American City & County’s Municipal Cost Index to stay on top of price trends, help control price increases for commodities, make informed government contract decisions and intelligent budget planning. Since 1978, readers have loyally referred to the Municipal Cost Index to determine the cost of inflation and, hence, the rising cost of doing business as a local government.

American City & County’s Municipal Cost Index for May 2012 and a complete archive since 1978 is available now at americancityandcounty.com/municipal-cost-index.