Commodity Plunges Check Everyday Prices

Table 1. epi expenditure categories and October 2015 weights
Trends in everyday prices versus the CPI

AIER’s Everyday Price Index (EPI) decreased 0.6 percent in October after dropping 1 percent in September. Including apparel, the EPI was down 0.5 percent.

Comparing the October EPI and the Consumer Price Index (CPI) reported by the Bureau of Labor Statistics, the CPI was unchanged in October on a not-seasonally-adjusted basis after decreasing 0.2 percent in September. AIER’s EPI is not seasonally adjusted.

Over the past 12 months the EPI fell 3 percent while the CPI rose 0.2 percent. The difference between the two is largely due to a drop in energy prices. The EPI assigns a greater weight to energy.

Energy prices have fallen in response to weak commodity prices. Crude oil, the main input for gasoline, has dropped 44.7 percent in the past year. Over the past 12 months gasoline prices have plunged 27.8 percent. Natural gas, a commodity used by utilities, has dropped in price 34.4 percent over the same time period, helping to push gas utility prices down 11 percent.

Similarly, food purchased at grocery stores was held in check by weak commodity prices, rising a very modest 0.7 percent. Agricultural and livestock commodity prices have fallen sharply over the past 12 months. A notable exception is eggs. The price of eggs has increased 30 percent over the past year, a surge largely caused by egg shortages linked to an outbreak of avian flu.

In contrast, prices of food purchased at restaurants have continued to rise at a faster pace. Over the past 12 months restaurant food prices have increased 2.9 percent. Prices at full service restaurants, such as the Cheesecake Factory and T.G.I Friday’s, have increased 2.6 percent. Those at limited-service establishments, such as Dunkin’ Donuts and Five Guys Burgers and Fries, have risen 3 percent. Even though restaurants face lower commodity prices, strong customer demand has supported price increases.

To learn more about the methodology of the Everyday Price Index, go to, “What is the EPI?”

Table 1. epi expenditure categories and October 2015 weights
Trends in everyday prices versus the CPI