October’s Producer Price Index was flat. However,
prices for most health goods and services grew slowly, if at all. Seven of the
15 price indices for health goods and services declined (Table I). The major exception
was prices for dental care, which increased 1.5 percent. Dental care is
dominated neither by government nor private insurance, so dental price
increases are not explained by my usual theory of health inflation. I
addressed dental price increases in a previous article.
Prices of pharmaceutical preparations for
final demand increased 0.4 percent, but that was in line with all goods for
final demand. Prices for construction of both health facilities and other
buildings increased 0.7 percent. This bears closer watching as President-elect
Trump promises more
spending on infrastructure, including hospitals.
Prices of health goods for intermediate
demand, especially medicinal and botanical chemicals, and biological products,
actually dropped. Perhaps this will flow through to prices of pharmaceutical products
but that has not previously been the case.
Over the last twelve months, prices of
health goods and services have increased faster than overall PPI, which grew
0.8 percent. The tables are turned: 12 of 15 health categories experienced
larger price increases than PPI did. Pharmaceutical preparations continue to
stand out dramatically, having grown 8.4 percent.
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