Housing, healthcare, and education costs have risen sharply, while discretionary costs such as communications, clothing, and furnishings have fallen.
For consumers, prices of discretionary goods have fallen, but the cost of basics including housing has risen sharply this century.
Between 2002 and 2018, most consumer price categories rose or fell in nearly straight line trends. Education rose by 51%. Housing and Healthcare rose around 20%. Food rose 2%. Recreation, Clothing, Furnishings, and Communications fell by 30% or more.
Transportation prices fluctuated more than the other categories. Transportation rose to +9% in 2008, dropped to −3% in 2009, rose to +12% in 2012, fell to −4% in 2016, and finally returned to the 2002 baseline in 2018.
|Category||Change in price, %||Share of consumer spending, %|
Source: McKinsey Global Institute analysis
McKinsey & Company
To read the article, see “COVID-19 has revived the social contract in advanced economies—for now. What will stick once the crisis abates?,” December 10, 2020.