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Everyday Life, Only Cheaper

coffee cupAmericans’ everyday expenses took a marked dip downward in November, according to an analysis by the American Institute for Economic Research.

The decrease in energy prices was big enough to offset an increase in prescription drug and childcare prices, while food prices on balance did not change. That’s according to AIER’s Everyday Price Index, released today.

AIER creates the EPI by starting with the Consumer Price Index, released by the federal government on Wednesday, and stripping out fixed costs like shelter, and non-recurring expenses like medical care. What’s left are “everyday” expenses that are subject to the ups and downs of the economy.

The CPI decreased 0.3 percent in November, but the EPI fell by a remarkable 1.2 percent, meaning that Americans generally felt a lower cost of living in November.

Energy prices fell by 5.5 percent during the month, led by a 9.1 percent dip in the price of regular gasoline.

Pushing back was the price of prescription drugs, which have increased by 4.6 percent over the last 12 months, and 0.4 percent during the month. Recent consolidation in the pharmaceutical industry has increased firms’ pricing power, and closed the gap between generic and brand-name prescription drugs, said Theodore Cangero, AIER senior research analyst.

The CPI has increased 1.3 percent over the past 12 months. In contrast, the EPI increased 0.7 percent over the past 12 months.

“By either measure inflation remains tame,” Cangero said.

See the report on the Everyday Price Index here.

2 Comments Post a comment
  1. marge d'amcio #

    I find the EPI construct very informative and helpful. Never heard of it before. Thanks, Aaron.

    Like

    December 18, 2014
  2. Ernest Welker #

    Article says that due to consolidation, pharmaceutical firms increased their pricing power and this [higher pricing power] has closed the gap between generic drugs and brand-name drugs. Did the now-bigger pharma firms with greater pricing power elect to DECREASE their prices in order to bring them down closer to the lower-priced generics? Why would greater pricing power be needed to do that? What am I missing?

    Like

    December 18, 2014

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