New York (CNN Business)Prices are rising rapidly in every corner of the economy as it emerges from the pandemic. But some areas are bucking that trend.
Medical care inflation was lower than 1% in the 12 months ending in May, the smallest increase since March 1941, when Franklin D. Roosevelt was president. In the month of May 2021 alone, prices for medical care services dipped 0.1%.Medical equipment and supply prices actually declined over the same year.
So why are prices going through the roof for some things, but not others?
Inflation measures price increases across a huge basket of goods and services. A lot of those prices are going up right now due to a combination of high demand and supply chain pressures. Read More”The price of about 80% of stuff is going through the roof. But the 20% is getting crushed,” Mike Englund, chief economist at Action Economics, told CNN Business.The pandemic has also changed what people spend their money on. For example, diminished spending on travel and eating in restaurants made room for outlays on durable goods like household items.And while the biggest price gains are in the things people are buying a lot of at the moment — such as used cars or furniture -— preventive doctor’s visits and healthcare weren’t on that list for the past year.”Everyone’s not going back to their regular dermatology visit,” Englund said.Medical care inflation stood at 4.6% in the 12 months ending February 2020, before the pandemic lockdown began. In 2021, the trailing 12-month data accounts for the changed pandemic consumer behavior. That’s why inflation in the sector is much lower now.
This trend also shows up in health care employment: The sector is still down more than half a million jobs compared with February 2020, when it hit a historic high of around 16.5 million jobs.Health care jobs will likely continue to recover as the economy returns to its pre-pandemic strength, Englund said. But he added it could take another year, until mid-2022, before they’re back to normal.