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BookmarkYou’re paying about 100% more to put a gallon of gas in your car today than you did 10 years ago, and 145% more to heat your home. Ouch.
Gasoline expenditures for the average household in 2012 reached $2,912, or just under 4% of income, according to the Energy Information Administration. That was the highest estimated percentage spent on gas in nearly three decades, except for 2008.
Other items and services tracked by the Bureau of Labor Statistics’ Consumer Price Index have seen steep price increases over the past decade, as well. The price for all items included in the CPI went up by about 26% over this time period, but for some things, the change was significantly greater.
In order to see which rose the most, we looked at a variety of sub-indexes in the CPI and calculated their change from the beginning of 2003 until April 2013. Here are the top 10, along with some perspective on what’s behind their increases.
1. Fuel oil and other fuels (for home): 145%
2. Gasoline (all types) for cars: 108%
In 2003 you paid about $1.58 (the same as $2 today) for a gallon of gas, according to GasBuddy.com. Earlier this year it was $3.70. The past few years have been volatile for oil prices, with record highs set in 2008. The price of crude is by far the most important factor in what consumers pay for gas and fuel oil, says James D. Hamilton, economics professor at University of California, San Diego. Since 2005 there have been only modest increases in the amount of crude produced worldwide, while demand from China, India and other emerging economies has grown enormously. “That imbalance drove up the price of crude oil, and with it the cost Americans pay for products like gasoline and heating oil,” Hamilton says.
3. College tuition: 88%
The cost of higher education has been the target of criticism for some time now, as student debt leaves graduates unable to pay off their loans. State and local spending on public institutions has fallen every year over the past decade, dropping from 70.7% of schools’ total revenue in 2000 to 57.1% in 2011, according to a 2012 report published by the Federal Reserve Bank of New York.
When state appropriations decrease, colleges have three main options for replacing the lost revenue: increasing tuition, shifting enrollment to out-of-state residents who pay more, and cutting enrollment so each student has the same size slice of the smaller pie of state funding, says Mark Kantrowitz, publisher of Edvisors.com, a network of web sites about planning and paying for college. “Usually colleges pursue a combination of these options,” he says. An extreme example is the University of California, which charged $11,160 in tuition to out-of-state residents last year, an increase of more than 150% from what students paid 10 years earlier, when it was $4,411 in today’s dollars.
4. Hospital services: 85%
While the cost of many medical-care services, including physicians’ services (33%) and dental services (50%), has climbed since 2003, BLS data indicate hospital services jumped the most. (The BLS defines hospital services as out-of-pocket expenses covered by health insurance billed by the hospital for accommodation, inpatient and outpatient services.)
David Parsely, an economics and finance professor at Vanderbilt University, noted that prices are higher in large part because hospital services today are vastly better than they were 10 years ago in terms of diagnoses, treatment and equipment. Indeed, the Kaiser Family Foundation says one of the major factors in the growth of health-care costs has been spending on new technologies, which “generate demand for more intense, costly services even if they are not necessarily cost-effective.”
5. College textbooks: 83%
Along with tuition, paying for college textbooks is a budget drainer for students. A post published last year by Mark J. Perry, economics professor at The University of Michigan-Flint and a scholar at theAmerican Enterprise Institute, noted that the price of books surged a staggering 812% from 1978 to 2012, sometimes costing $200 to $300 each.
“Unnecessary new editions, expensive bundles and e-books that expire are common publishing industry tactics that further increase costs for students,” according to CALPIRG, a California consumer group.
6. Elementary and high school tuition and fees: 67%
The BLS includes all tuition and fees charged by private schools, grades 1 through 12 in this category. Tuition spikes at some of New York City’s most prestigious private schools garnered attention a couple of years back when the Riverdale Country School topped $40,000 in annual tuition.
According to the National Association of Independent Schools (NAIS), whose members are nonprofit private schools (but do not include parochial schools), day school tuition increased by 65.8% between 2002-03 and 2012-13. The number does not include boarding schools, which the BLS also tries to exclude from its measurement. Myra McGovern, an NAIS spokeswoman, says one of the main sources of tuition hikes over the past 10 years is an increase in “direct services” to students. These include specialized classes that require institutions to hire, say, Mandarin teachers, as well as an increase in the number of learning specialists and counselors.
7. Beef and veal: 64.8%
8. Eggs: 58%
The rise in food prices, particularly items such as beef and eggs, comes mostly from increases in feed grain prices, says Michael J. Roberts, associate professor of economics at University of Hawaii at Manoa. The price of feed grain, in turn, derives from a variety of factors, including ethanol policies, growing demand for meat from emerging economies, bad weather and population growth, says Roberts. The ethanol mandate and former subsidies created a huge new demand for corn for use in ethanol production, which drove up the price of all grains and oilseeds, he says.
The other factor affecting beef was the record drought in 2011 and 2012 that hit the southern Plains and devastated supplies of grass and water needed to feed cattle. It drove up the price of hay and put serious pressure on the beef sector in general, says Corinne Alexander, associate professor ofagricultural economics at Purdue University.
9. Veterinarian services: 63%
According to the American Pet Products Association, owners spent $13.67 billion on vet care in 2012, up from $7.9 billion in 2003 — a 77% jump.
The overall increase in pet ownership likely accounts for some of that growth, but more advanced-care options play a big role, too. Pets now get ultrasounds, chemotherapy and complex orthopedic and neurologic procedures, driving up costs. More-sophisticated care is reflected in an increasing demand for veterinary specialists, says Tom McPheron of the American Veterinary Medical Association. And as a 2011 Wall Street Journal article noted, the veterinarian industry has been under pressure to improve their bottom lines, and therefore raise fees.
10. Tax return preparation and other accounting fees: 51%
As the tax code’s complexity grows, so does the need for help from the pros. One popular way of measuring complexity is the number of pages in the U.S. tax code, which has increased from 60,044 pages in 2004 to 73,954 pages in 2013.
As tracked by the National Society of Accountants, the cost for professional tax preparation went up 22% in the past eight years — $246 vs. $201 for having an accountant prepare a Form 1040 with a Schedule A for itemized deductions, plus a state tax return. Some other factors contributing to the hikes, according to Roger Russell of Accounting Today, include the increased cost of software. Returns are getting more complex, requiring more time spent on them and more forms to submit, Russell says.
