Consumer Price Inflation, by Type of Good or Service (2000-2022)

The Consumer Price Index (CPI) provides a steady indication of how inflation is affecting the economy. This big picture number is useful for policymakers and professionals in the financial sector, but most people experience inflation at the cash register or checkout screen.

Since the start of the 21st century, U.S. consumers have seen a divergence of price movements across various categories. Nowhere is this better illustrated than on this chart concept thought up by AEI’s Mark J. Perry. It’s sometimes referred to as the “chart of the century” because it provides such a clear and impactful jump-off point to discuss a number of economic forces.

The punchline is that many consumer goods—particularly those that were easily outsourced—saw price drops, while key “non-tradable” categories saw massive increases. We’ll look at both situations in more detail below.

Race to the Top: Inflation in Healthcare and Education

Since the beginning of this century, two types of essential categories have been marching steadily upward in price: healthcare and education.

America has a well documented “medical inflation” issue. There are a number of reasons why costs in the healthcare sector keep rising, including rising labor costs, an aging population, better technology, and medical tourism. The pricing of pharmaceutical products and hospital services are also a major contributor to increases. As Barry Ritholtz has diplomatically stated, “market forces don’t work very well in this industry”.

Rising medical costs have serious consequences for the U.S. population. (Read more...)