AIER’s Everyday Price Index jumped 1.1 percent in March, nearly double the 0.6 percent gain in the Consumer Price Index. The EPI measures price changes people see in everyday purchases such as groceries, restaurant meals, gasoline, and utilities. The EPI is not seasonally adjusted, so we compare it with the unadjusted CPI. The EPI including apparel, a broader measure, gained 1.0 percent in March as apparel prices rose a modest 0.1 percent for the month. Both measures exclude prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices contractually fixed for prolonged periods (such as housing).
Over the past 12 months, the EPI has risen 1.1 percent while the EPI including apparel is up just 0.8 percent. The more widely known price gauge, the Consumer Price Index, reported by the Bureau of Labor Statistics, includes less frequently purchased items and everyday purchases. That measure is up 1.9 percent over the past 12 months. Over the last five years, the EPI is up at a 0.1 percent annualized rate compared to an average annual rise of 1.5 percent for the CPI.
The two major contributors to the March increase in the EPI were energy, particularly motor fuel, and tobacco. From mid-2011 through mid-2014, West Texas Intermediate crude oil averaged over $96 per barrel. From mid-2014 through early 2016, crude prices collapsed to a low of just over $26 per barrel, a drop of about 70 percent. Between the 2016 low and late 2018, oil prices have trended higher, reaching $76.40 in early October, nearly tripling in price. Crude plunged again, falling about 40 percent in about three months. From the low at the end of 2018, prices have once again surged, rising from around $45 to $65. Those fluctuations cause tremendous volatility in the prices of finished energy products such as gasoline and put pressure on some services, such as utilities and transportation services, many of which are included in the EPI. In March, motor fuels jumped 8.8 percent on a not-seasonally-adjusted basis. That surge accounted for the majority of the rise in the overall EPI.
Other significant contributions to the monthly change in the EPI came from tobacco prices, which jumped 1.4 percent on an unadjusted basis in March. Over the last 12 months, tobacco prices are up 5.4 percent. Increases in taxes on tobacco are often the cause of sharp increases for tobacco-related products.
Over the past year, about three-fourths of the categories that make up the EPI have posted higher prices with 7 categories showing a rise of less than 2 percent and 11 showing gains greater than 2 percent. A quarter of the categories show price declines over the past year.
Among the components with the largest weights in the EPI, food at home (21.3 percent weight) is up 1.4 percent from a year ago, food away from home (17.7 percent) is up 3.0 percent, household fuels and utilities (13.5 percent) are up 0.7 percent for the year, and motor fuel (10.6 percent) is down 0.6 percent since last March. Combined, they account for 63.1 percent of the EPI.