AIER’s Everyday Price surged 2.1 percent in May after a 0.5 percent increase in April, a 3.0 percent jump in March, and a 1.3 percent gain in February. Over the first five months of 2022, the EPI is up at an annualized rate of 20.6 percent. From a year ago, the Everyday Price Index is up 12.8 percent, the fastest on record dating back to 1987.
Price increases continue to be generally broad-based with 19 components showing gains versus four showing declines, and one unchanged in May. Motor fuel prices, which are often a significant driver of the monthly changes in the Everyday Price index because of the large weighting in the index and the volatility of the underlying commodity, led the gainers with a 7.8 percent rice rise for the month (on a not-seasonally adjusted basis), contributing 108 basis points to the monthly increase.
Household fuels and utilities was the second-largest contributor in May, adding 43 basis points, followed by a 34-basis-point contribution from food at home, and an 11-basis-point contribution from food away from home (restaurants). The remaining contributions were four basis points or less.
The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, rose 2.0 percent in May after gaining 0.4 percent in April, 2.8 percent in March, and 1.4 percent in February, contributing to an annualized rate of rise of 20.0 percent for the first five months of 2022. Over the past year, the Everyday Price Index including apparel is up 12.2 percent, also a record high back to 1987.
Apparel prices fell 0.1 percent on a not-seasonally-adjusted basis in May. Apparel prices tend to be volatile on a month-to-month basis. From a year ago, apparel prices are up 5.0 percent.
The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, rose 1.1 percent on a not-seasonally-adjusted basis in May. Over the past year, the Consumer Price Index is up 8.6 percent, the fastest pace since December 1981.
The Consumer Price Index excluding food and energy rose 0.6 percent for the month (not seasonally adjusted) while the 12-month change came in at 6.0 percent. The 12-month change in the core CPI was just 1.3 percent in February 2021 and 2.3 percent in January 2020, before the pandemic.
After seasonal adjustment, the CPI rose 1.0 percent in May while the core increased 0.6 percent for the month. Within the core, core goods prices were up 0.7 percent in May and are up 8.5 percent from a year ago. Significant increases for the month were seen in used cars and trucks (1.8 percent), pet food (1.6 percent), motor vehicle parts and equipment (1.5 percent), new cars (1.1 percent), new trucks (1.0 percent), and sporting goods (0.9 percent).
Core services prices were up 0.6 percent for the month and are up 5.2 percent from a year ago. Among core services, gainers include airfares (up 12.6 percent for the month and 37.8 percent from a year ago), health insurance (up 2.0 percent and 13.8 percent from a year ago), cable and satellite television services (1.3 percent and 5.8 percent from a year ago), other lodging away from home including hotels (up 0.9 percent for the month and 19.3 percent from a year ago), car and truck rentals (up 0.8 percent and 10.4 percent from a year ago), and owners’ equivalent rent (which accounts for 23.8 percent of the CPI, rose 0.6 percent for the month and 5.1 percent from a year ago).
Price pressures for many goods and services in the economy remain elevated due to shortages of supplies and materials, logistical and supply chain issues, and labor shortages and turnover. Sustained elevated price increases are likely distorting economic activity by influencing consumer and business decisions. Furthermore, price pressures have resulted in a new Fed tightening cycle, raising the risk of a policy mistake. In addition, turmoil surrounding the Russian invasion of Ukraine and renewed lockdowns in China are sustaining a high level of uncertainty for the economic outlook. Caution is warranted.
This article, AIER’s Everyday Price Index Rises a Record 12.8 Percent Over the Last 12 Months, was originally published by the American Institute for Economic Research and appears here with permission. Please support their efforts.