Friday, October 14, 2016

PPI: Health Prices (Except Pharmaceuticals) Stay Tame

September’s Producer Price Index rose 0.3 percent, a significant pick up. However, prices for most health goods and services grew slowly, if at all. Eleven of the 15 prices for health goods and services reported grew slower than the headline PPI. The major exception was prices for pharmaceutical preparations, which increased 1.2 percent, resuming a trend which I had hoped was breaking down. Further, prices of medicinal and botanical chemicals dropped 0.7 percent. So, price increases for pharmaceutical preparations are not coming from the ingredients.

However, over the last twelve months, prices of health goods and services have increased faster than overall PPI, which grew 0.7 percent. The tables are turned: 11 of 15 health categories experienced larger price increases than PPI did. Pharmaceutical preparations continue to stand out dramatically, having grown 8.1 percent. Nursing homes, for which prices rose 2.4 percent, might replace drug makers as the whipping boy for high health prices, but they have a long way to go.

See Table I below the fold:



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