Lockdowns Drive Up Everyday Prices in May – Robert Hughes (06/11/2020)

Note: The Everyday Price Index for May is based on incomplete data due to restrictions on data collection by Bureau of Labor Statistics personnel because of the COVID-19 outbreak.

AIER’s Everyday Price Index rose 0.3 percent in May after posting a 0.9 percent decrease in April. The Everyday Price index had fallen for three consecutive months in February through April and has been flat or down in eight of the last 12 months. Over the past year, the Everyday Price Index is down 1.7 percent, the same result as last month. The Everyday Price Index measures price changes people see in everyday purchases such as groceries, restaurant meals, gasoline, and utilities. It excludes prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices contractually fixed for prolonged periods (such as housing).

The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, was unchanged in May after sinking 1.2 percent in April. The Everyday Price Index including Apparel has been flat or down in eight of the past 12 months and is down 2.2 percent over the past year. Apparel prices fell 3.2 percent on a not-seasonally-adjusted basis in May and are down 7.9 percent over the past year, the largest 12-month decline on record going back to 1950.

The largest positive contributors to the Everyday Price index in May were categories of items likely driven higher by lockdowns. Grocery prices (food at home) rose 0.8 percent in May, contributing 19 basis points to the 30 basis-point rise in everyday prices, and are now up 4.8 percent from a year ago, the fastest pace since January 2012. Housekeeping supplies prices and gardening and lawn services prices posted 0.8 percent increases for the month as well while recreational reading materials prices rose 1.0 percent. Alcoholic beverage prices rose 0.5 percent for the month and prices for food away from home (take-out food under lockdowns) rose 0.4 percent. Motor fuel prices continued to pull down everyday prices as that category fell 0.3 percent for the month on a not-seasonally-adjusted basis, putting the 12-month change at -33.5 percent.

The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, was unchanged on a not-seasonally-adjusted basis in May. The Everyday Price Index is not seasonally adjusted, so we compare it with the unadjusted Consumer Price Index. Over the past year, the Consumer Price Index is up just 0.1 percent, the slowest pace since September 2015. For the Consumer Price Index excluding food and energy, the index fell 0.1 percent for the month while the 12-month change came in at 1.2 percent, the slowest pace since March 2011.

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