Gardening Services and Admissions Prices Boost the AIER Everyday Price Index

The EPI increased 0.4 Percent in June while the CPI rose 0.2 percent
EPI Expenditure Categories and June 2018 Weights

AIER’s Everyday Price Index rose 0.4 percent in June, above the 0.2 percent gain in the Consumer Price Index. The EPI measures price changes people see in everyday purchases such as groceries, restaurant meals, gasoline, and utilities. The EPI is not seasonally adjusted, so we compare it with the unadjusted CPI. The EPI including apparel, a broader measure, increased 0.1 percent in June as apparel prices fell sharply for the second month after four consecutive increases from January through April. Both measures exclude prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices contractually fixed for prolonged periods (such as housing).

Over the past 12 months, the EPI has risen 3.9 percent while the EPI including apparel is up 3.6 percent. The more widely known price gauge, the Consumer Price Index, reported by the Bureau of Labor Statistics, includes less-frequently purchased items and everyday purchases. That measure is up 2.9 percent over the past 12 months. Over the last five years, the EPI is up at a 0.8 percent annualized rate compared to an average annual rise of 1.5 percent for the CPI.

Among the notable contributions to the monthly change in the EPI in June were apparel prices, which plunged 2.3 percent on an unadjusted basis in June. On a seasonally adjusted basis, apparel prices fell 0.9 percent for the month. For all of 2017, apparel prices fell 1.6 percent, but over the first four months of 2018, prices increased at an annualized rate of 23.4 percent. Prices have now declined over the last two months, leaving the 12-month change at a modest 0.6 percent.

Offsetting the recent declines in apparel prices were substantial gains in admissions prices and gardening services. Admissions prices for movies, theaters, and sporting events jumped 2.4 percent in June, partially reflecting seasonal forces. On a seasonally adjusted basis, admissions prices still gained 1.8 percent for the month. Gardening-services prices rose 1.1 percent for the month, the fourth increase in the past five. From a year ago, gardening- and lawn-services prices are up 7.6 percent while admissions prices are up 4.1 percent.

Energy prices remained the largest contributor to the EPI increase in June as motor fuel accounted for 4 basis points and household fuels and utilities added 20 basis points of the total 37-basis-point increase for June. In total, 15 categories made positive contributions to the rise in the EPI in June while 9 categories subtracted from the EPI.

Among the components with the largest weights in the EPI, food at home (20.7 percent weight) is up 0.4 percent from a year ago, food away from home (17.0 percent) is up 2.8 percent, household fuels and utilities (13.3 percent) are up 1.1 percent for the year, and motor fuel (12.9 percent) is up 24.3 percent since last June. Combined, they account for 63.9 percent of the EPI.

The EPI increased 0.4 Percent in June while the CPI rose 0.2 percent
EPI Expenditure Categories and June 2018 Weights

Robert 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.