The EPI assumes a larger share of household budgets is consumed by energy than does the CPI. The overall energy increase of 1.5 percent in June was led by motor fuel (+0.3 percent). Specifically, gasoline of all grades increased (regular +0.3 percent, midgrade +0.6, premium +0.1). However, for those driving diesel engines the price of fuel decreased (other motor fuels -0.8 percent). For consumers who utilize public transportation, fare prices increased by 0.1 percent. Energy intensive air conditioning, widely used during the summer months, pushed up demand, which was reflected in a 5.2 percent increase in the price of electricity.
Overall, food prices were flat for the month of June. Food at home decreased 0.1 percent restrained by fresh fruits and vegetables (-1.5 percent), dairy (-0.4 percent), and cereal and bakery products (-0.2 percent). Meats, poultry, fish, and eggs experienced the smallest increase since December 2013 (+0.2 percent). Barbeque staples such as uncooked ground beef and steaks increased 0.2 and 0.4 percent respectively. Chicken increased 2.5 percent but the price of cutting your own fresh whole chicken decreased 2.7 percent. Condiments, such as ketchup and mustard, were down (-5.0 percent). Olives, pickles, and relishes decreased (-1.1 percent). Dining out on your favorite restaurant’s patio increased moderately (+0.2 percent).
Other everyday prices that increased include prescription drugs (+0.7 percent), personal care services (+0.1), admissions to movies, concerts, and sporting events (+0.3 percent), internet services (+0.2 percent) and tobacco products (+1.0 percent). On the other hand, recreational reading materials, such as novels and magazines, decreased 1.0 percent and alcoholic beverages decreased 0.1 percent. Personal care products and postage were flat in the month of June.
Transitory trends driving prices higher include the greening disease, which has attacked crops in the south, and has led to a 12.2 percent increase in the price of citrus fruits over the last 12 months. Farmers are also fending off a deadly hog virus that has resulted in a 12.0 percent year-over-year increase in the price of pork products. Longer term, as labor markets improve and credit expands prices will increase. Check back for AIER’s upcoming Inflation Report which will examine the accuracy of inflation forecasts produced by investors, consumers, government, and professional forecasters.
About the EPI
AIER’s Everyday Price Index (EPI) measures the changing prices of frequently purchased items like food and utilities. We do this by selecting the prices of goods and services from the thousands collected monthly by the Bureau of Labor Statistics in computing its Consumer Price Index. The EPI basket contains only prices of goods and services that Americans typically buy at least once a month, excluding contractually fixed purchases such as mortgages. Our staff economists weight each EPI category in proportion to its share of Americans’ average monthly expenditures. In order to better reflect the out-of-pocket prices that consumers experience on a daily basis, the EPI does not seasonally adjust prices.
To learn more about our methodology, view the weights assigned to each component, and browse past EPI updates, visit AIER’s EPI Methodology page.