Price Trends: Where the Spending Impact is Big



Spend more on school books. Save on school clothes. Those are among the spending choices facing households as suggested by the latest numbers on U.S. consumer prices.

  • Eggs, child care, hospital services, and prescription drugs are among the other specific categories—besides school books— where households face significantly higher prices this year compared with last year. More generally, price pressures are focused in eating out, rent, medical care, and education.
  • Providing savings to offset higher prices are price declines in specific categories such as girls’ apparel, women’s dresses, ham, pork, toys, airline fares, and appliances. More generally, flat or falling prices are focused in fuel, food at home, apparel, and personal care.

These extremes illustrate the impact from prices that is otherwise hidden by the headline (CPI) numbers, which show relatively modest consumer price inflation in the broadest measures. See the table summary below.

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Impact @Work: Workplaces that are able to raise prices should not overplay their hand—especially as price inflation returns in other categories in the longer term and puts greater pressure on household spending. To improve performance, workplaces without pricing power should use price cutting more judiciously in recognition that lower prices do not boost unit volume demand as they did in the past.

For more on how these price trends affect the outlook for the retail holiday, see the post at this link.

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Impact @Home: Cut back on the omelets as egg prices soar and be mindful of the price pressures in school-related categories—as well as in prescription drugs and medical care more generally. Take advantage of lower prices in categories such as appliances, apparel, and toys—not to mention the opportunity to do more travel (by car or airline, given lower prices on both fronts).


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