Consumer Basics Lift EPI Prices

Chart 1. Prices Over the Long Term

The federal government shutdown caused a delay in the release of inflation data (consumer expenditure survey data) by the Bureau of Labor Statistics.  The numbers we report this month were estimated by AIER by applying statistical modeling to historical data. According to our model, the Everyday Price Index rose by an estimated 0.5 percent in September, following a 0.1 percent drop in August. The increase was driven largely by basic consumer products. 

According to AIER’s estimate, consumer essentials such as food, beverages, tobacco, and housekeeping supplies all went up in September. In particular, prices for food at home saw their biggest rise since a dip in April.

Since then, international prices for food have been declining. However, the decline in international food prices wasn’t enough to reverse the overall rise of food prices.

The upward trend in the cost of food at home may be moderated in October because gasoline prices are likely to keep falling and reduce transportation costs for food-related businesses. The average price for a gallon of gasoline at the pump decreased $0.04 in September. At press time, the average price is $3.37 per gallon, $0.16 lower than the average September price.

The government shutdown has delayed more than half a million government employees’ paychecks. It also reduced revenue for businesses such as hotels and restaurants around national parks and federal agency offices.

Consumer spending on essential goods is not likely to be slowed by the shutdown as it did not last long enough to impact these purchases. Besides, businesses have continued adding jobs, according to private payroll company ADP, and government employees will receive back pay for the time they were off the job due to the shutdown.

Chart 1. Prices Over the Long Term