Where is inflation hitting consumers hardest? New data shows which goods and services have seen the biggest price hikes

Where is inflation hitting consumers hardest? New data shows which goods and services have seen the biggest price hikes

It’s no secret that prices have increased in the last decade — especially for healthcare. And as new economic policies like tariffs take effect, we can expect consumer out-of-pocket costs to continue to fluctuate.

GoodRx Research tracked how inflation is hitting consumers across different budget categories, including prescription medications.

Key takeaways:

• New data from GoodRx Research finds that inflation is hitting consumers hard across many categories, including food, rent, and medical care. While the cost of prescription medications has increased by 39% since 2014, prices have increased even more for tobacco, meat and eggs, rent, and hospital services.
• Wages have increased alongside consumer prices, but inflation for many essentials, like housing and hospital services, continues to outpace earnings growth. As a result, managing health is becoming increasingly unaffordable.
• Prescription medications have seen the highest inflation compared to other medical goods, like nonprescription medications and medical equipment. However, prices have increased faster for medical services, like inpatient and outpatient care, nursing homes, and dental care.

The chart below illustrates the cumulative price increases across various consumer categories since 2014, highlighting how healthcare-related expenses compare to other essential goods and services.

Note that there are many different ways to measure prescription drug costs: patient out-of-pocket costs, manufacturer list prices, average wholesale prices, cash prices, insurance copays, and more. For example, the Bureau of Labor Statistics calculates a consumer price index for a typical basket of prescription drugs, which has increased by 30% since 2014. By comparison, list prices set by drug manufacturers have increased by 39% since 2014.

The consumer categories hit hardest by inflation

Consumer prices for many categories have increased substantially in the last decade. Since 2014, overall prices for all goods and services have grown by 37%.

The following consumer categories have seen price increases greater than overall inflation:

• Eggs
• Tobacco
• Rent
• Average hourly earnings
• Meats, poultry, and fish
• All food items
• Prescription drugs

While wages have risen over time, they haven’t kept pace with many goods and services. Categories like tobacco and rent, in particular, still outpace earnings growth.

Prescription-drug costs increased rapidly from 2014 to 2017. Since then, we’ve seen steady and regular list price increases of roughly 3% to 4% at the start of each year. As a result, prescription drug costs have landed at around 39% higher than they were in 2014.

Today, however, drug price inflation is no longer the fastest mover. Housing, food, and even wages have now overtaken the pace of prescription drug inflation. But within the general category or medical goods, prescription medications remain among the most prone to inflation.

The fastest-growing prices in healthcare

Rising consumer medical prices contribute significantly to inflation, making healthcare increasingly unaffordable for many.

Several categories of healthcare prices are growing faster than overall inflation:

• Veterinary services
• Inpatient hospital services
• Outpatient hospital services
• Nursing homes
• Dental services
• Prescription drugs

Hospital services have been hit hardest by inflation, despite efforts to rein in patient costs through policies like hospital price transparency. The cost of nursing homes has also increased rapidly in the last decade. Higher prices for hospitals and nursing homes pose a big problem for the aging U.S. population, with the share of people 65 years old and up expected to increase by 47% in 25 years.

The cost of veterinary care for pets has also skyrocketed in recent years, with prices growing by 75% since 2014. Pet healthcare costs are largely unregulated, and many pet owners pay completely out of pocket for veterinary care.

The cost of dental care has also increased rapidly in the last few years, catching up to other healthcare categories like prescription drugs. Among medical goods, price changes for prescription drugs top the list, beating nonprescription drugs and medical supplies.

What rising prices mean for consumers

healthcare inflation isn’t just outpacing overall inflation — it’s outpacing income. That means people’s earnings are not growing as fast as the majority of their healthcare costs, including hospital visits, prescription drugs, dental care, and nursing homes.

With healthcare costs growing faster than incomes, healthcare is becoming increasingly unaffordable for many people, even those with insurance. The number of people who are “underinsured” — which includes people with disproportionately high healthcare costs compared to their income — is likely to keep growing if things don’t change.

And with economic policies under continued debate — from tax changes to import restrictions — it’s more important than ever to track how these shifts may ripple through the healthcare system and everyday budgets.

Methodology

We compared price change data from the Bureau of Labor Statistics’ Consumer Price Index to changes in list prices measured by wholesale acquisition costs set by manufacturers.

According to the Bureau of Labor and Statistics, “the Consumer Price Index (CPI) is a measure of the average change over time in the prices of consumer items — goods and services that people buy for day-to-day living.” The CPI is estimated based on a representative sample of consumer purchases across the U.S., but it is not a complete measure of all price changes. The CPI also includes changes in sales tax and other taxes.

Patients don’t usually pay the list price of a medication directly at the pharmacy counter. However, the list price can have lasting effects on the price of a drug and healthcare overall — influencing coinsurance and copayments, pharmacy reimbursements, and even insurance premiums in the long term. Higher list prices ultimately lead to higher out-of-pocket costs for patients.

We chose to track changes in prescription drug costs through medication list prices in order to capture the full spectrum of medications available on the market and dispensed at community retail pharmacies. We use a nationally representative sample of prescription medications from each quarter to estimate the drug mix across all community retail pharmacies for that time period. The drug mix is then used to calculate the average list price change of all drugs.

This story was produced by GoodRx and reviewed and distributed by Stacker.