Gasoline and Grocery Store Prices Decline

AIER’s Everyday Price Index (EPI) decreased by 0.7 percent in December after dropping 0.6 percent in November. Including apparel, the EPI fell 0.9 percent.

In comparison, the Consumer Price Index reported by the Bureau of Labor Statistics decreased 0.3 percent in December on a not-seasonally-adjusted basis after falling 0.2 percent in November. AIER’s EPI is not seasonally adjusted.

Looking back at 2015, the EPI fell 1.9 percent for the year while the CPI rose 0.7 percent. The difference between the two is largely due to plummeting energy prices, which are weighted more heavily in the EPI.

Energy prices fell 2.4 percent in December and have dropped 12.7 percent over the past year because of an ample supply of crude oil and natural gas. Gasoline prices decreased 3.9 percent in December and have dropped 19.7 percent over the last 12 months. With winter in full swing, home heating oil fell 4 percent and gas utilities dropped 0.8 percent.

The 0.5 percent decline in grocery store prices in December was broad based. Meat, poultry, fish, and egg prices dropped 1.4 percent, fruits and vegetable prices fell 0.5 percent, and bakery products fell 0.1 percent. The only grocery store food prices to increase were dairy products, up 0.1 percent. Over the past 12 months grocery store prices have dropped 0.5 percent, well below their historical average.

Restaurant prices, on the other hand, increased 0.1 percent in December and have risen 2.6 percent over the past year at least in part due to rising demand. Consumer demand for meals at restaurants, as reflected in the real personal consumption expenditures on food service, has increased 4 percent over the past year.

Prescription drug prices fell 0.3 percent in December, while prices for personal-care services declined 0.2 percent. However, over the past 12 months both prescription drugs and personal-care service prices have risen 2.4 percent.