Where Inflation Is Hiding – Consumer Dynamics
Each month the Bureau of Labor Statistics releases the Consumer Price Index (CPI) which essentially is a measure of inflation. The latest CPI numbers tell us that inflation over the past year (Jan 2017 - Jan 2018) is about 2.1%. The 2.1% reading is a compilation of prices of various services and products consumed throughout the economy. Of the many items monitored, a few stood out as rising faster in prices than the overall inflation rate. Fruits and vegetables, eating out, energy, hospital services and auto insurance.
Inflation impacts consumers differently with demographics and lifestyle being significant components. As an example, inflation for retiring individuals is very different than inflation for college students. Not only are age differences significant but lifestyle and daily needs are as well. Of the various components that have risen faster than the overall inflation rate for the past year, essential items such as energy and fruits and vegetables tend to impact seniors and students similarly. However, the ongoing increases in medical and hospital service expenses is primarily a burden for seniors and retirees. On the other hand, the increase in auto insurance costs and transportation services tend to be more impactful on younger consumers that are still very mobile.
Source: Bureau of Labor Statistics