CPI – Economic Thinking In Action

Employment and Wage & Hour Statistics Focus: Consumer Price Index

The Consumer Price Index (CPI) is monthly data released by the Bureau of Labor Statistics on the change in prices paid by urban consumers for a representative basket of goods and services. The CPI is available by region and consumer type. It is most often used to measure inflation, which is an important concern when present-valuing economic damages in the future. Future damages must be discounted by the rate of inflation, because one dollar today is worth more than one dollar tomorrow.

Note: Even though CPIs differ by city, it is not appropriate to use CPI data to compare the cost of living between cities. The CPI does not measure price differentials between cities, but rather only over time. The representative basket of goods and services varies with geographic location.

For information on the Consumer Price Index, please refer to www.bls.gov/cpi

Image source: http://theregister.co.nz/news/2015/08/new-zealands-consumer-price-index-it-accurate-enough

CPI rose while medical care commodities and medical services fell from Jan to Feb

general_inflation_2015_02 The consumer price index (CPI) went up from 234.677 in January 2015 to 235.186 in February 2015, an annualized rate of 2.60%.

The price index for medical care commodities went down at an annualized rate of 0.06% from January 2015 to February 2015. During the same period, the price index decreased for medical care services (2.31%), hospital and related services (2.32%), and professional services (1.86%).

Source: BLS

Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

CPI falls faster than medical care commodities while medical services rise from Dec to Jan

The consumer price index (CPI) went down from 236.284 in December 2014 to 234.677 in January 2015, an annualized rate of 8.16%.

The price index for medical care commodities went down at an annualized rate of 3.37% from December 2014 to January 2015. During the same period, the price index increased for medical care services (0.98%), hospital and related services (0.59%), and professional services (2.09%).

Source: BLS

Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

Medical care commodities inflate more than general inflation from Oct to Nov

The consumer price index (CPI) went down from 37.909 in October 2014 to 237.428 in November 2014, an annualized rate of 3.08%.

The price index for medical care commodities went up at an annualized rate of 7.33% from October 2014 to November 2014. During the same period, the price index also increased for medical care services (4.78%), hospital and related services (2.98%), and professional services (6.05%).

Source: BLS

Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

Medical care commodities inflate at a lower rate than general inflation from July to August

The consumer price index (CPI) went down from 37.909 in July 2014 to 237.428 in August 2014, an annualized rate of 1.79%.

medical_commodities_2014_08 medical_services_2014_08

The price index for medical care commodities went up at an annualized rate of 1.45% from July 2014 to August 2014. During the same period, the price index for hospital and related services went up at an annualized rate of 1.32%, whereas medical care services and professional services went down at an annualized rate of 0.46% and 3.04%, respectively.

Source: BLS

Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

Medical care commodities inflate at a higher rate than general inflation from June 2014 to July 2014

The consumer price index (CPI) went up from 237.693 in June 2014 to 237.909 in July 2014, an annualized rate of 1.09%. The price index for medical care commodities went up at an annualized rate of 3.99% from June 2014 to July 2014. During the same period, the price index for medical care services and hospital and related services went up at an annualized rate of 1.44% and 5.01%, respectively, whereas professional services went down at an annualized rate of 0.59%. Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

Medical Care Commodities Inflate at a Higher Rate than General Inflation from May 2014 to June 2014

The consumer price index (CPI) went up from 37.083 in May 2014 to 237.693 in June 2014, an annualized rate of 3.09%.

The price index for medical care commodities went up at an annualized rate of 8.36% from May 2014 to June 2014. During the same period, the price index for medical care services and professional services went down at an annualized rate of 0.16% and 1.31%, respectively, whereas hospital and related services went up at 2.06%.

Image source: http://www.shutterstock.com/pic-54762670/stock-photo-background-concept-illustration-consumer-price-index.html

Inflation is simply nowhere to be found in the U.S. economy

The latest data from the BLS further confirms the low level of inflation in the U.S. A number of notable items that make up a large percentage of the CPI actually declined in 2013. Motor fuel (which has a weight of 5.68 out of 100) in the CPI declined 1.0%, Household furnishings (3.2) fell 2.2%. Medical equipment, non prescription drug prices, and recreational supplies (like sporting goods). The average price of DVDs fell nearly 10% last year.

Economist, Justin Wolfers provides a light, but informative closer look at the recent CPI numbers and cookie versus cupcake inflation:

It's striking how much cupcake inflation differs from cookie inflation which differs from donut inflation. pic.twitter.com/fsFT17yMFr

— Justin Wolfers (@JustinWolfers) January 16, 2014