The Consumer Price Index rose 0.4 percent in October.
Remarkably, medical prices were flat overall. This is the second month in a row we have enjoyed medical price relief. Even prescription
drugs rose by only 0.2 percent, half the rate of headline CPI, while prices of
non-prescription drugs dropped significantly. Even the price of health insurance
dropped a smidgeon!
Prices for inpatient hospital services rose the most,
by 0.6 percent. As noted in my discussion of the Producer Price Index, this bears closer watching as President-elect Trump promises
more spending on infrastructure, including
hospitals.
Over the last 12 months, however, medical prices have
increased three times faster than non-medical prices: 1.4 percent versus 4.3
percent. Price changes for medical care contributed 22 percent of the overall
increase in CPI.
Many observers of medical prices decline to
differentiate between nominal and real inflation. Because CPI is has been low
until recently, even relatively moderate nominal price hikes for medical care
are actually substantial real price hikes. More than six years after the
Affordable Care Act was passed, consumers have not seen relief from high
medical prices, which have increased over twice as much as the CPI less medical
care since March 2010, the month President Obama signed the law.
(See Figure I and Table I below the fold.)
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