Federal Reserve Economic Data

How do prices change over time?

Prices tend to go up, especially over long periods. But some prices can increase much faster than others and some can even decrease. Over the past 40 years or so, price changes for goods have tended to be lower than price changes for services.

Our FRED graph above uses data from the consumer price index release table to track price changes for some specific goods. The average CPI, shown by the solid blue line, is noticeably higher than the values for all the specific goods listed in the graph.

Our FRED graph below tracks price changes for some specific services. The average CPI, shown by the same solid blue line, is noticeably lower than the values for all the services listed in the graph.

Why are price changes for goods below average?

Increases in quality and productivity have allowed for slower increases in the prices of many goods and even some actual price declines.

The quality of cars has improved considerably. These enhancements have to be factored-out to get a genuine apples-to-apples price reading that can be compared over time.

For example: If you pay $35,000 for a car today and 8 years ago you paid $25,000, then the difference in purchase price is $10,000. But consider this: You’re also getting the most modern features with your new car, such as automatic emergency braking and keyless entry with biometric access. Those features weren’t available when you bought your previous car. So, because you’re getting much greater value with this purchase, the adjusted CPI price increase would be much less than $10,000.

The same applies to computer equipment, which wasn’t even a consumer good in the early 1980s.

Productivity in manufacturing has also improved considerably. Apparel, toys, and car parts, for example, can be produced much more efficiently or in lower-cost locations than before. As engineers find more efficient ways of making things, those things become (relatively) cheaper.

Why are price changes for services above average?

It is much more difficult to improve productivity for services than it is for goods, so services have gotten much more expensive. Consider education and medical care, for example. You cannot successfully increase classroom size beyond some point, and you cannot put more patients in a single hospital bed. Another example is the barber: Technology improvements in hair cutting have been very limited, and barbers still serve roughly the same number of customers each day as they did 40 years ago.

Of course, the rise of artificial intelligence may create new trends for some services. A topic for another day.

One more thing to know about the CPI

A good that has actually gotten much more expensive over time is tobacco products. These products have had increasingly higher taxation for several decades, with the intent to reduce their consumption. Helpfully, the CPI accounts for taxes when it calculates price changes.

How these graphs were created: Start from the CPI release table noted above, which you can find in the notes for the CPI graph or any of its components in FRED. Check the series you want displayed. Click on “Add to graph.” Change the start year to 1983.

Suggested by Christian Zimmermann.

The FRED Blog often discusses inflation—in particular, the consumer price index reported by the US Bureau of Labor Statistics. The CPI from the BLS measures the average change over time in the prices paid by urban consumers for a representative basket of consumer goods and services.

Over the years, the BLS has improved the official CPI by updating samples and weights, expanding coverage, and enhancing how it calculates the numbers. Sometimes the BLS also produces experimental versions to explore alternative methodologies. One of these experiments is the harmonized index of consumer prices (HICP).

Our FRED graph above shows the year-over-year inflation rate measured by each of these indexes. They differ in a  few ways.

• Solid blue line: The CPI inflation rate estimates price changes for the noninstitutional urban population. It doesn’t include the rural/nonmetropolitan population in its coverage, due largely to the difficulty involved in sampling the remote and sparsely populated areas of the country.
• Dashed green line: The HICP inflation rate estimates price changes for the entire population, both urban and rural. And, unlike the CPI, it excludes cost measures of owner-occupied housing. (Learn more about how CPI measures housing inflation.)

Despite the methodological differences between the CPI and HICP, both price indexes generally yield very similar inflation rates. The most visible differences are noticeable during times of heightened inflation volatility, such as the Great Recession of 2007-2009 and the post-Covid inflation ramp-up and slow-down from 2021 to 2024.

To learn more about this topic, visit the BLS and read this Monthly Labor Review by article Walter Lane and Mary Lynn Schmidt.

How this graph was created: Search FRED for and select “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average.” Click “Edit Graph” and the “Add Line” tab, then and search for and select “Harmonized Index of Consumer Prices: All-Items HICP for United States.” Last, use the “Edit Lines” tab to change the units to “Percent Change from Year Ago” and click on “Copy to all.”

Suggested by Diego Mendez-Carbajo.

The FRED Blog has described key information about data contained in the “Notes” provided under each FRED graph. Today, to underscore, highlight, and emphasize that point, we offer another example.

Our FRED graph above shows quarterly data of US gross domestic product (GDP) between 1947 Q1 and 2025 Q2 from two different sources:

• International Monetary Fund (IMF) (solid blue line)
• US Bureau of Economic Analysis (BEA) (dashed green line)

The data plots don’t align, even after accounting for the fact that the IMF reports the data in millions of dollars and the BEA does so in billions of dollars. What gives?

The notes below the graph contain the relevant information, or metadata, about the data: The BEA data are presented as annualized values, while the IMF data are not. That means the BEA reports each quarterly data figure as if GDP were to remain at that level for a whole year. That makes comparisons with related and historical data easier. In contrast, the IMF report a quarterly number for each quarter.

To see this for yourself, click the word “Customize” in the bottom left corner of the FRED graph, which takes you to the series page on the FRED website. There, click “Edit Graph” / “Edit Lines” and customize “Line 1” by changing the formula a/1000 to a/1000*4. Voilá! The FRED graph now shows two identical data plots.

How this graph was created: Search “FRED for and select “Nominal Gross Domestic Product for United States.” Click on “Edit Graph,” select the “Add Line” tab, and search for and select “Gross Domestic Product.” Last, use the “Edit Lines” tab to customize “Line 1” by typing the formula a/1000. Don’t forget to click “Apply.”

Suggested by Diego Mendez-Carbajo.