May 12, 2020 Reading Time: 3 minutes

Note: The Everyday Price Index for April is based on incomplete data due to restrictions on data collection by Bureau of Labor Statistics personnel because of the COVID-19 outbreak.

AIER’s Everyday Price Index fell 0.9 percent in April after posting a revised 0.6 percent decrease in March. The Everyday Price index has fallen for three consecutive months and has been flat or down in eight of the last eleven months. Over the past year, the Everyday Price Index is down 1.7 percent, the first year-over-year decline since September 2019. The Everyday Price Index measures price changes people see in everyday purchases such as groceries, restaurant meals, gasoline, and utilities. It excludes prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices contractually fixed for prolonged periods (such as housing).

The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, was down 1.2 percent in April after falling 0.6 percent in March. The Everyday Price Index including Apparel has been flat or down in seven of the past eleven months and is down 2.0 percent over the past year, also the first 12-month decline since September. Apparel prices fell 4.4 percent on a not-seasonally-adjusted basis in April and are down 5.7 percent over the past year, the largest 12-month decline on record going back to 1950.

The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, fell 0.7 percent on a not-seasonally-adjusted basis in April. The Everyday Price Index is not seasonally adjusted, so we compare it with the unadjusted Consumer Price Index. Over the past year, the Consumer Price Index is up just 0.3 percent, the slowest pace since October 2015.

Motor fuel prices fell 16.3 percent for the month on a not-seasonally-adjusted basis. That drop reduced the Everyday Price Index by 1.57 percentage points. Over the past year, motor fuel prices are down 31.7 percent. Motor fuel prices are largely a function of crude oil prices. West Texas Intermediate crude oil prices had plummeted to around $20 in mid-April as the outbreak of COVID-19 and tensions among OPEC members drove prices lower. In a bizarre situation, the expiration of current month crude oil futures plummeted into negative territory in late April as supply overwhelmed demand and storage.

The largest positive contributors to the Everyday Price index in April were grocery prices (food at home) which rose 2.7 percent in April, contributing 60 basis points, and are now up 4.1 percent from a year ago, the fastest pace since February 2012, while housekeeping supplies prices rose 2.6 percent in April, contributing 7 basis points.

For the Consumer Price Index excluding food and energy, the index fell 0.4 percent for the month, the largest monthly decline on record back to 1957. Over the last 12 months, the core Consumer Price Index is up 1.4 percent, the slowest pace since April 2011. The five-year, 10-year, and 20-year annualized growth rates all come in at 1.9 percent.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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