For a third consecutive month, everyday prices moved sharply higher with gains led by motor fuels prices. The AIER Everyday Price Index increased by 1.2 percent for the month following back-to-back increases of 0.8 percent in January and February, putting the 3-month annualized rate at 11.9 percent and the 12-month gain at 4.4 percent, the fastest pace since November 2011.
Motor fuels prices jumped 11.7 percent for the month following gains of 6.9 percent in January and February and contributed 105 basis points to the 1.2 percent gain in the Everyday Price Index. From a year ago, motor fuels prices are up 22.2 percent. Other significant contributors to the March increase were grocery prices (food at home, up 0.2 percent for the month, contributing 5 basis points to the monthly change), household fuels and utilities (up 0.2 percent for the month and contributing 3 basis points), and admissions prices for movies, theaters, concerts, and sporting events, etc., (up 2.6 percent for the month while contributing 5 basis points).
The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, also rose 1.2 percent in March, following back-to-back gains of 0.9 percent in January and February, producing a three-month annualized rate of 12.7 percent. Over the past year, the Everyday Price Index including apparel is up 3.8 percent, the fastest since February 2012. Apparel prices rose 0.6 percent on a not-seasonally-adjusted basis in March following gains of 1.9 percent in February and 2.9 percent in January. However, from a year ago, apparel prices are off 2.5 percent.
The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, rose 0.7 percent on a not-seasonally-adjusted basis in March. Over the past year, the Consumer Price Index is up 2.6 percent. The Consumer Price Index excluding food and energy rose 0.4 percent for the month (not seasonally adjusted) while the 12-month change came in at 1.6 percent.
After seasonal adjustment, the CPI rose 0.6 percent in March while the core increased 0.3 percent for the month. Within the core, core goods prices were up 0.1 percent in March and are up 1.7 percent from a year ago while core services prices rose 0.4 percent for the month and are up 1.6 percent from a year ago. The rise in the core goods category was led by 0.6 percent increases in used vehicles and tobacco. On the core services side, significant increases came from motor vehicle insurance (up 3.3 percent for the month), transportation services (+1.8 percent), and motor vehicle maintenance services (+1.0 percent).
Energy prices continue to drive the Everyday Price Index higher in the early part of 2021. Like many measures of activity within the economy, some prices continue to be distorted by government restrictions on consumers and businesses. As restrictions are lifted and activity returns to normal, prices will begin to reflect true market forces.
Note: The Everyday Price Index for March is based on incomplete data due to restrictions on data collection by Bureau of Labor Statistics personnel because of the Covid-19 pandemic.
This article, Energy Price Surge Continues to Drive Everyday Prices Higher, was originally published by the American Institute for Economic Research and appears here with permission. Please support their efforts.