Birmingham-based Oakworth Capital Bank has released a new cost-of-living study, showing that while the cost of living is up, the cost of living well is more static.
Oakworth explains that it developed its index to leave out items like household appliances, which most people don’t buy every month, and concentrate on food and cleaning supplies, which are pretty constant needs for most consumers.
Then each month, the bank’s economic team compares the cost of two loads of grocery store items – one with the basics, one with contents a consumer might select “when preparing a celebratory dinner at home.”
The “cost of living” basket includes mac and cheese, milk, shampoo, laundry detergent, orange juice, tuna and toilet paper, among other common needs. The “cost of living it up” basket — priced at Publix rather than Walmart — includes beef tenderloin, asparagus, wine and beer, brie cheese and other delectables.
While the fancy basket is always more expensive than the basics, the change in price is higher for the basics, Oakworth reports.
“Within the OCPI, the ‘cost of living’ basket has increased at a more rapid rate than the ‘cost of living it up,’” Oakworth reported today. “This suggests price increases for essential, or inelastic, goods and services have had a greater impact on household budgets than non-essentials. Intuitively, this would hurt lower income earners more than higher income earners.
“Both consumer baskets have shown great volatility this year, with little to no change in many items and strong double-digit price increases in others,” the report continued. “As of the end of April, it is hard to determine a strong correlation or causation as to why certain products have gone up more significantly than others. This could suggest continued inefficiencies in the global supply and distribution networks are distorting prices in an uneven manner.”
