Best (and Worst) Value Buys Right Now
Learnings from the July CPI release
Earlier this summer, I published an overview of the Consumer Price Index (“CPI”). Today, I’m back with a late-July update about what the latest report (dated July 12, 2023) has to offer in terms of insights about how to guide your personal spending. While I’m not an economist, I am comfortable processing data sets (my scrub is here) and making suggestions based on what the numbers are telling us.
As a refresher, Table 2 of the CPI offers us detailed expenditure data by category for all urban customers. This means that these numbers aren’t capturing the spending patterns of people living in rural areas, farms, the Armed Forces, and prisons. It’s still a very comprehensive cut of about 87% of the US population.
There are over 300 individual items included in this table, segmenting into food, energy, and non-food/non-energy items. We can find everything from hot dogs to window coverings, to musical instruments in Table 2. Best of all, it offers an easy reference for year over year change as well as change from the previous month. Even better, it takes the monthly data one step further and also includes a seasonal adjustment.
This equips us with enough information to look for big swings on an annual and monthly basis. As I evaluate these measures, I’m especially curious about divergences, for example, when there is a large positive or negative change over the course of a year, but seems to be reversing from in the most recent months data.
Let’s go exploring.
Food
Have you felt the pinch of rising flour prices? Last summer, flour prices surged 5.3% in a single month. Flour and prepared flour mixes have risen in price by over 12% since June 2022. And that’s following even larger year-over-year increases from 2021 to 2022.
What happens when flour prices rise? Eventually cereal, bread, and baked good prices follow. And this is borne out in the data, with cereals up 7-9%, bread up 10-12%, and baked goods up 6-12% in a single year. This might be a good time to cut carbs or try going gluten-free!
And relief may be on the way soon, with one-year wheat futures down about 10% from the same time last year. But as commodity markets go, volatility strikes unexpectedly.
The news is also glum for frozen fruits and vegetables, up about 13-18% since 2022. Processed and canned fruits and vegetables are up 7-9%, too. This may be due to labor shortages at production facilities and/or poor growing conditions and reduced harvests.
And while fresh fruit prices are up close to 5% in a single month as extreme heat bakes crops and compromises the growing season, prices of apples and citrus fruits are both down 2.3% on a seasonally adjusted month-to-month basis. Tomato prices are up 2.8% from May to June 2023, and I felt this myself while paying $5.99 for a pint of grape tomatoes at the supermarket yesterday. Is it too late to start a garden?
As for cooking fats and oils, things have been bleak in the margarine department (up 13.1% since 2022) but looking better for butter (down 1.4% since 2022). And take this as your cue to stockpile oils and salad dressings, which ever so slightly declined in price in June after 9-13% annual price increases. Act quickly, because I read recently in the Financial Times that olive oil prices are set to spike due to a drought in Spain.
Following the outcry at the beginning of the year over egg prices, relief has arrived in the form of a 7.3% price decline from May to June. You’ll now find a dozen eggs for $1.99 in many grocery stores. Omelettes for every meal wasn’t on my 2023 Bingo card, but it is now.
If you like bacon with your eggs, you’ll be glad to hear that bacon and related products have fallen by 6-10% since this time last year. Even on a seasonally adjusted basis, prices fell over 100 basis points from May to June 2023. And if your family enjoys any type of pork product, prices for roasts, steaks and ribs are down 9.4% since 2022, and are 3.3% lower than in May 2023. Though ham has increased almost 5% since last year, on a seasonally adjusted basis, it’s trending nearly 3% lower from May to June.
Though ice cream prices are up close to 1% from May, the price of fresh whole milk has dropped 4% since last year, so invest your savings into an ice cream maker, or learn to make no-churn homemade ice cream.
But beware of spiking sugar prices. Similar to flour, sugar and sugar substitutes have increased 11% since last year. From May to June, prices are up close to 2%.
Takeaways:
Flour prices continue to run high and spilling over into breads, baked goods, and cereals
Frozen fruits and vegetables are way up in price, but apples, oranges and citrus fruit are down modestly
Processed fruits and vegetables (canned and frozen) are way up in price, so it would be better to buy fresh and preserve at-home
Egg prices fell 7.3% in a month and it’s an eggscellent time to buy more
Buy pork products now, especially bacon and ham
It’s a great time to buy whole milk
If you’re thinking of making your own ice cream to solve for higher-than usual ice cream prices, consider alternate sweeteners as the price of sugar continues to skyrocket
Energy
If grocery prices have you searching for ways to penny pinch, some relief is available at the gas pump. But you’ll have to keep prices in context. Though gas is down 22-27% since last year, prices are up a tad on a seasonally adjusted basis.
Electricity prices rose 3.5% from May to June, which suggests that the record heat of this month could leave many consumers with whopping utility bills for air conditioning. But there’s other relief in the form of energy prices that cratered as much as 31-37% (motor fuels and fuel oil). These decreases show up in transportation cost declines, which we’ll investigate below.
Takeaways:
A road trip is much cheaper in 2023 than in 2022
Find cooler destinations for summer travel (San Francisco is barely 60 degrees for most of June and July) and leave your AC off while you go on vacation to counter electricity price increases
Non-Food, Non-Energy
The long wait times and lack of sales on appliances are behind us. Appliance prices have fallen over 10% from last summer, and between May and June, laundry-related appliances decreased over 3%. And if you might need some new tools to help get the appliance set up, prices abated close to 1% in June, despite a 6-plus percent rise from 2022 to 2023. For those with automotive know-how, motor oil, coolant, and fluids dropped more than 3% in June, sharply reversing the 4% increase of the prior year.
Now is the time for women to buy outerwear. Those with children at home, might be perplexed by the modestly sharper rise in girls apparel (4.1%) versus boys (2.6%) in the previous year, but the recent month’s 1.7% seasonally adjusted decline in girls apparel while boys apparel went 1.9% in the other direction. Perhaps this is the summer of equilibrating children’s clothing prices.
Though summer travel is well underway, falling energy prices have led to an almost 20% annual decline in airfare prices and an 8.1% drop in June. Pair that with a 2.3% decrease in hotel prices in June, and a 12.4% annual decline in rental car prices and you’ve got yourself a winning formula for travel. Just know that if you’re heading somewhere to catch a sporting event, that in June, ticket prices jumped 5.5%, which is vastly in excess of the 3.1% for all of the prior year. If you take public transportation, prices have declined close to 7% at the start of the summer, so maybe there’s some savings to be realized on the way to the stadium.
The trickle down effect of higher prices seems to have worked its way into the service provider sector, with vets, dentists, accountants, personal care providers and the like hiking their rates as much as 20% in the past year.
Takeaways:
Don’t feel guilty about buying a new appliance right now
Laundry equipment is an especially good deal
Tools, hardware and supplies have increased in price since last year but began to reverse trend in June 2023, so don’t feel guilty about your trips to the hardware store
Go jacket shopping for colder (and wetter) weather now, ladies
Buy your daughters clothing now, but keep in mind that prices for boys apparel are up, despite girls apparel being down
Stationery and gift wrap prices have jumped close to 10% since last year, so take advantage of flat prices from May to June to stock up now ahead of the fourth quarter gifting season
Hotel prices were a seasonally-adjusted 2.3% lower in June and airline fares were over 8% lower so be on the lookout for summer travel bargains
Renting a car or truck has come down in price more than 12% since last year, so it’s a good time for a summer road trip or move before the days get shorter and cooler
The cost of attending sporting events rose 5.5% from May to June, despite only a 3.1% year-over-year increase, so factor this in when planning outings to cheer on your favorite team
Public transportation costs dropped nearly 7% in June, so take the train/bus/streetcar when it makes sense
Fees for specialized and skilled services ranging from vets, accountants, and personal care (dental, hair, shaving) have raised prices 8-20% in the last year, and prices continue to creep up, so learning to DIY things you previously outsourced could be a reasonable substitute of time for money
A reminder that these metrics are published 10-14 days after the end of each previous month. The full calendar is available on the Bureau of Labor Statistics website. If you find reads like this helpful, please let me know!