The Consumer Price Index (CPI) indicates how inflation is affecting an economy. This big picture number is useful for policymakers, but most people experience inflation at the cash register.
Since the start of the 21st century, US consumers have seen a divergence of price movements across various categories, illustrated in the chart below.
US Consumer Price Inflation by Goods and Services (2000 to 2022)
Source: Visual Capitalist
Many consumer goods – particularly those outsourced – saw price drops, while key “non-tradable” categories saw large increases.
Since the beginning of this century, two essential categories have been marching steadily upward in price: healthcare and education. There are many reasons why healthcare costs keep rising, including rising labour costs, an ageing population, better technology, medical tourism, and the political power of Big Pharma.
Also near the top of the chart are education-related categories. In the ’60s and ’70s, tuition roughly tracked with inflation, but that began to change in the mid-1980s. Since then, tuition costs have marched ever upward. Since 2000, tuition prices have increased by 178% with college textbooks jumping 162%.
While essentials like education and healthcare have rocketed up, some goods and services have dropped dramatically, such as flat screen TVs, cellular services and software, and toys. Over the long term, clothing, and household furnishings have remained relatively flat.
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