As Inflation Rises for Most of the Economy, Internet Prices Decline

CPI September 2021

The COVID-19 pandemic has disrupted supply chains and consumers have seen price increases on many goods. In fact, the Bureau of Labor Statistics recently released its Consumer Price Index (CPI) for the month of September which showed that, as compared to September 2020, overall prices for consumers increased 5.4%. However, the real price of internet services fell 2.6% in September as compared to last year. In other words, while much of the economy has seen significant prices increases, internet price changes are at rates below many other important goods and services purchased by consumers.

As the name suggests, the CPI, which is published monthly, measures the prices paid by consumers for a range of goods and services, including “food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living.” The price changes of these individual components, collected directly from households and retail outlets, are then assigned weights representing their importance in the economy and an overall price index is calculated.

The pandemic has shown that, more than ever, the internet is a crucial service for consumers to work, study and stay connected from home, as well as a significant source of entertainment for people of all ages. Yet, despite this surge in demand, internet prices have been changing more slowly than many other key consumer goods and services. For example, the real price of new and used vehicles in September increased 9.1% relative to the price at the same time last year. While the real price of food fell 0.8% over the year, this is a smaller decline than the 2.6% fall in real prices observed for internet services.

Cable internet providers are taking an active role in ensuring their services remain affordable, even while the overall economy reflects larger price increases. To help get more people connected to the internet, cable providers offer low-cost broadband adoption programs, with service for eligible families beginning as low as $9.95 per month. These programs have connected over 14 million Americans in the past 10 years to the internet.  

CPI Rates September 2021