Tuesday's CPI report for the month of June showed that overall price levels increased 0.3% relative to May. While the fractional increases we typically see in each month's CPI report seem like small moves, over time they add up. For example, over the last eight years the overall level of consumer prices has increased by nearly 18%. And that's just the official government figures. Talk to some people and they'll tell you the actual rate of inflation is much higher.
Using the official figures from the CPI, the table above breaks out the change in prices for each of the eight major sectors in the report. For each sector, we also include the sector's weight in the overall CPI, its percentage change since June 2006, and its contribution to the total increase in CPI. As shown, the sector that has seen the largest increase in prices has been Medical Care, which has seen an increase of 29.6%, and is responsible for just under 9% of the total overall increase in the CPI. While one of the promises of the Affordable Care Act was that it would lower the cost of health care, as of now those benefits have yet to materialize. Even more than four years after the bill was signed into law and more than two years after the Supreme Court upheld the law, the 2.61% increase in the cost of Medical Care over the last year is higher than any other sector.
In order to get a better view of what areas of the economy have been driving the overall level of prices higher, the chart below shows how each sector has cumulatively accounted for the overall increase in CPI. While there are eight sectors shown, the chart clearly shows that the main drivers of inflation in the CPI are Housing, Transportation, Food & Beverages, and Medical Care. Together, these four sectors account for more than 85% of the total increase in the CPI over the last eight years.