Federal Reserve Economic Data: Your trusted data source since 1991

The FRED® Blog

Posts tagged with: "CP0000FRM086NEST"

View this series on FRED

Checking up on hospital price inflation

Rising medical costs are not a foregone conclusion

Many people are concerned with the persistent rise in medical costs. But as long as medical services are delivered (for the most part) by people, economic theory tells us that rising costs are normal: As technological progress makes the production of goods less expensive, the production of services becomes comparatively more expensive. Of course, technological progress can also occur with the delivery of services. A good example is the introduction of ATMs, which have dramatically reduced the cost of simple bank transactions.

The delivery of medical care has not (yet) seen such cost-saving technological advances; hence, its relative costs continue to generally increase, in line with basic economic theory. But the pace of that increase may differ under different circumstances. In international comparisons, health care delivery operates under vastly different market mechanisms. The graph above shows inflation for hospital stays in four countries: the United States, where health care is largely privately provided and paid for (except for the poorest and for retirees); the U.K. and France, where health care is provided and paid for by the state; and Switzerland, where people must enroll in private, but regulated, health insurance (not unlike Obamacare).

Surprisingly, the inflation experience is remarkably similar in the U.K. and the U.S., despite having health care institutions that are polar opposites. France shows much less inflation, and Switzerland even shows some deflation. Note that general inflation was similar in all these countries over this period, so dividing each hospital price index by the corresponding general price index yields a similar picture—shown in the graph below. But keep in mind that these are just four examples, and many other factors may matter. So, one shouldn’t generalize from such a small sample. But one also shouldn’t say that health prices always go up.

How these graphs were created: Search for “hospital CPI,” check the series you want, and click on “Add to Graph.” From the “Edit Graph” section, open the panel with the U.S. series and set the units to 100 for 2015-01-01 to match the other series. Finally, start the sample period on 2001-01-01. For the second graph, add to each line a second series (the CPI for the U.S., the harmonized consumer price index for all items for the other countries), apply formula a/b, and set the units to 100 for 2015-01-01.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CP0000CHM086NEST, CP0000FRM086NEST, CP0000GBM086NEST, CP0630CHM086NEST, CP0630FRM086NEST, CP0630GBM086NEST, CPIAUCSL, CUSR0000SEMD

To your health! The price of French wine

Today, France celebrates its national holiday. So we take this opportunity to write about… French wine. Oui. FRED does have a price index for French wine. And because prices are always relative to something else, we compare this index with the general price level of consumption goods in France (the blue line). We see that, in relative terms, the price of wine has increased, which sounds bad for the local population. But we can also compare the price of wine with the typical French hourly wage (the red line): There we see that wine has become more and more affordable for the French, which is a reason to celebrate.

How this graph was created: Search for “French wine” and open the graph. In the “Edit Graph” panel, add France’s general price index in the “Customize Data” section. Searching for “France CPI” should do the trick. Once you have both series, apply the formula a/b. In the “Add Line” tab, search again for “French wine” (which may appear among your recently viewed options). Then under “Edit Line 2” add the wage series by searching for “French wage.” Choose the quarterly series for all activities and apply the same a/b formula again. Viola!

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CP0000FRM086NEST, CP0212FRM086NEST, LCWRTT01FRQ661N

Inflation across space

The national consumer price index averages the prices of many goods across the entire nation. But just because this index gets all the headlines doesn’t mean that all prices evolve in the same way. Certainly, there can be short-term differences in price. But it’s generally underappreciated that there can be longer-term differences as well. The graph above illustrates this by comparing a few MSAs in the United States: The differences in their price evolutions show that inflation at the local level is not entirely driven by a common currency. The same applies to countries under a monetary union, such as those from the European Monetary Union in the graph below. Put more simply, using the same currency does not mean the inflation rate will be the same everywhere. Why? First, the basket of goods used to compute the local price index may differ. Second, the relative prices of the local goods may vary, foremost housing and transportation. And third, the local business cycles are not synchronized, meaning that inflationary pressures may vary from place to place.

How these graphs were created: Play with the tags until you find your preferred set of series. For the first graph, it is useful to set the geography type to “msa” and choose “annual” for frequency. Then you can easily narrow down the set of series. For the second graph, “nation” and “eurostat” are good starting points. Once you have a list of series you’re happy with, select them and click on the “Add to graph” button.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CP0000FIM086NEST, CP0000FRM086NEST, CP0000GRM086NEST, CP0000NLM086NEST, CUUSA103SA0, CUUSA210SA0, CUUSA425SA0, CUUSA426SA0

Subscribe to the FRED newsletter

Follow us

Back to Top