Prices Fall for Common Holiday Gift Items

Chart 1 Trends in everyday prices (EPI) versus the Consumer Price Index The EPI dropped 0.4 percent in November after falling 0.1 percent in October.
Table 1 EPI expenditure categories and November 2016 weights

AIER’s monthly Everyday Price Index fell 0.4 percent in November, led by lower gasoline prices. The EPI measures price changes that people see in everyday purchases such as groceries, gasoline, utilities, and personal-care products.

The EPI including apparel, a broader measure, was down 0.6 percent. Over the past 12 months, it inched up 0.5 percent while the overall EPI rose 0.6 percent. Both measures exclude prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices that are contractually fixed for prolonged periods (like housing).

The more widely known price gauge, the Consumer Price Index reported by the U.S. Bureau of Labor Statistics, fell 0.2 percent for the month on a seasonally unadjusted basis and moved 1.7 percent higher over the past 12 months. The EPI is not seasonally adjusted, so we compare it with the unadjusted CPI.

The holidays are here, and prices for common holiday gifts such as apparel, books, and personal-care products, are all lower. Apparel prices fell 2.3 percent in November. Prices for women’s and girls’ apparel fell 2.6 percent, faster than for men’s and boys’ clothing, which are 2.2 percent lower. Prices for books, another common gift, dropped 0.5 percent over the past year, much lower than their long-term average increase of 1.8 percent. Rounding out the holiday gift list, prices for personal-care products have fallen 0.5 percent over the past year, with personal grooming products dropping 0.6 percent and cosmetics down 0.4 percent.

The story is different if you plan to purchase a restaurant gift card this holiday season. Restaurant prices are up 2.3 percent over the last 12 months, a faster rise than grocery prices, which have fallen 0.3 percent. Menu prices have risen because brisk consumer demand has offset lower agricultural input prices, which have fallen 0.7 percent over the past year. In the latest Restaurant Performance Index, restaurants reported heavier customer traffic and higher same-store sales compared with recent months. This has helped spur real consumer spending, which is up 1.8 percent over the past year.

Gasoline prices dropped 2.4 percent in November, helping household budgets. Gasoline prices declined across all grades, with regular falling 2.6 percent and premium down 1.4 percent. Other energy prices were mixed. Home heating oil fell 1.2 percent, while prices for natural gas increased 0.2 percent. Over the last 12 months natural gas prices have jumped 6.2 percent.

Chart 1 Trends in everyday prices (EPI) versus the Consumer Price Index The EPI dropped 0.4 percent in November after falling 0.1 percent in October.
Table 1 EPI expenditure categories and November 2016 weights