January 13, 2021
The pandemic has led to a real flip in price trends. Rent, medical care, and education had been sectors with higher inflation. This is no longer the case; now food and cars see the highest inflation. This will likely flip back when the pandemic fades, although slower rental inflation could last.
- A big jump in gas prices pushes overall CPI up 0.4 percent in December; core CPI is up just 0.1 percent. Year-over-year, the overall CPI is up 1.4 percent, and the core is up 1.6 percent.
- Store-bought food and restaurant prices both rose 0.4 percent in December. Prices are up an identical 3.9 percent year-over-year. Usually restaurant prices rise about 1.0 percentage point faster, but the pandemic has shifted demand.
- New vehicle prices are up 0.4 percent in December, up 2.0 percent year-over-year. Prices had been near flat pre-pandemic, driven by low interest rates. Used vehicle prices are down 1.2 percent in December )after falling 1.3 percent in November), but are still up 10.0 percent year-over-year. Sharp price increases in July through September is the reason. Auto insurance prices rise 1.4 percent in December, after a 1.1 percent increase in November. Auto insurance prices are down 4.8 percent year-over-year as people are driving less and having fewer accidents.
- Rent and owners’ equivalent rent are both up 0.1 percent in December; they are up 2.3 percent and 2.2 percent, respectively, year-over-year. The sharp slowing of rental inflation in this pandemic is a very big deal. The rent index in NYC fell 0.1 percent in December, up just 1.3 percent year-over-year. It had been rising by 3.0 percent pre-pandemic.
- Medical care prices are down 0.2 percent in December for the third consecutive decline; prices are up just 1.8 percent year-over-year. Prescription drug prices are down 0.4 percent in December, and down 2.4 percent year-over-year. It is important to note this does not include prices of new drugs. The health care insurance index (measures administrative costs and profits) fell 1.1 percent in December, but still up 4.8 percent year-over-year. It had been rising at close to 20 percent rate.
- College tuition is up 0.2 percent in December, and up just 0.7 percent year-over-year.
- Hotel prices flat in December, down 11.2 percent year-over-year. Airfares fell 2.3 percent in December after sharp rises in the prior two months. Airlines didn’t raise fares as much in December as would ordinarily be the case. Fares are still down 18.4 percent year-over-year.
- Apparel prices rose 1.4 percent in December, but are still down 4.0 percent year-over-year. Demand plummeted with people working from home.