see more from Save Money

Inflation Watch: Medical Care and Energy Costs Increased in March

Larissa Runkle

by Larissa Runkle

Contributor

A bag full of prescription drugs falls with an inflation arrow coming out of it showing the costs are increasing.
Getty Images

Inflation is a hot topic of conversation. Consumers are digging even deeper into their pockets for everything from groceries to rent or mortgage payments.

While we can’t promise an easy solution for combatting rising inflation rates, we can share a tool that economists and savvy penny hoarders alike use for watching its ebb and flow. We’ll also explain what it means for the average person and how it changed this month.

What is the CPI?

If you’ve never heard of it, the Consumer Price Index (CPI) is a monthly report released by the U.S. Bureau of Labor Statistics (BLS). It provides a snapshot of critical areas of inflation as they relate to what people buy on a regular basis.

“The CPI covers basic goods we need, like food and energy, plus other items we spend money on, especially services that involve labor costs, like home repairs and personal care,” said Joe Camberato, CEO of NationalBusinessCapital.com. “When the CPI goes up, especially in areas like dining out and services, it means our expenses are increasing, which can affect how much we can buy with our money.”

So how does the BLS get this information? It’s actually pretty interesting.

Each month, the BLS gathers a sample of data from 75 urban locations across the country. It includes 80,000 price quotes from some 22,000 retail and service providers and 6,000 housing units. The data isn’t perfect and notably leaves out numbers from more rural locations. However, the BLS estimates these numbers reflect pricing increases and decreases for 93% of the U.S. population in categories like food, housing, energy and medical care.

Why Does CPI Matter?

The CPI is a useful tool for understanding what aspects of your daily expenses are getting more (or less) expensive. It can come in handy when you’re trying to optimize your budgets, investments and saving strategies.

“Consumers can use the CPI to determine and plan for how their cost of living is going to change over time,” said Cliff Ambrose, founder and wealth manager at Apex Wealth. “By tracking CPI trends, they can adjust their budgets accordingly and anticipate changes in expenses for essentials like housing, groceries and health care.”

Understanding the CPI won’t just help with your budgeting. It may also provide clues as to how and where you should invest your discretionary income.

“If CPI reports indicate rising inflation, consumers may consider investing in assets that typically outperform during inflationary periods, such as real estate, commodities, or Treasury Inflation-Protected Securities (TIPS),” Ambrose said. “Additionally, they may want to negotiate fixed-rate contracts or consider refinancing debt to lock in lower interest rates.”

Now that you understand a bit about the CPI and how you can use it for your own financial benefit, let’s dive into this month’s CPI report.

What Went Up:

Each month, the CPI report reflects data gathered from the previous month. The latest CPI report, which came out in April 2024, reflects survey results for March 2024. Here’s what went up:

  • The CPI as a whole increased by 0.4%: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in March after also rising 0.4% in February. Over the last 12 months, the CPI has increased by 3.5%.
  • Housing: The index for shelter continued to rise in March, increasing by 0.4%. This is part of a bigger trend: The shelter index rose 5.7% over the last year and reflects expenses for homeowners and renters alike.
  • Food: The food index as a whole increased by 0.1% in March after remaining unchanged in February. This index is further broken down into food-at-home, which remained unchanged, and food away from home, which rose 0.3%.
  • Transportation: The transportation index has also been on an upward trajectory this year. It rose 1.5% in March and 10.7% over the past 12 months.
  • Energy: The energy index increased 1.1% in March, as did some of its component indexes: The gasoline index increased by 1.7%, energy commodities increased by 1.5%, energy services increased by 0.7% and electricity rose 0.9%. The index for natural gas was unchanged over the month.
  • Medical care: The medical care index rose by 0.6% in March after remaining unchanged in February. Its sub-indexes also increased: The index for hospital services rose 1.0% during March, while the index for physicians’ services increased 0.1% and the index for prescription drugs increased by 0.3%. These increases reflect the upward trend of the index as a whole, which has risen by 2.1% over the past 12 months.
  • Apparel: The apparel index rose by 0.7% in March.

Other notable increases: The index for all items less food and energy rose 3.8% over the past 12 months. Other indexes with notable increases over the last year include recreation (up 1.8%), personal care (up 4.2%) and motor vehicle insurance (up 22.2%). Check out our guide for the best car insurance companies if a price hike has you hunting for a new policy.

What Went Down:

Here are the categories of the CPI that have gone down in the past month.

  • Commodities: In March, the index for Commodities less food and energy commodities decreased by 0.2%.
  • New vehicles: The index for new cars decreased by 0.2%.
  • Used vehicles: The index for used cars and trucks decreased by 1.1%.
  • Fuel oil: The fuel oil index decreased 1.3% in March.

What This Means For You: 

Here are some insights into facing the inflation fluctuations this month.

Housing: Housing has been steadily rising all year for homeowners and renters.

  • What this means: Put aside more money for your housing costs, especially if you have an adjustable-rate mortgage, plan on taking on a new mortgage or renewing your lease soon.

Food: Although food has become increasingly more expensive over the past year, it didn’t change significantly in March. Another thing to note is the food away from home category, aka dining out, has continued to increase. It went up an additional 0.3% in March — part of its upward trajectory of 4.2% this year.

  • What this means: Be picky with how you grocery shop and when and where you dine out, as the latter is typically more expensive. Some consumers are fighting back against the price increases by holding off on buying their favorite items or buying a cheaper brand.

Medical care: Medical care costs like hospital and physician services increased again this month, which reflects a larger upward trend (an increase by 2.1%) over the past 12 months.

Energy: Energy is back up in all categories, so you’ll likely notice a slight increase when you go to fill up your tank or pay your energy bill.

Larissa Runkle (@therealest8writer) is a writer and editor living in Colorado. Her work focuses on personal finance, luxury real estate and lifestyle guides.