PPI: Pharmaceutical Prices Finally Tame In November

November’s Producer Price Index (PPI) finally saw a slowdown in pharmaceutical price increases, which increased 0.3 percent, month on month. This was the same as the overall PPI increase. Price increases for health goods and services were very slight, compared to general PPI. Indeed, two categories (X-Ray & electromedical equipment and biological products including diagnostics) actually experienced price deflation (see Table I).

The longer-term trend still reflects high price increases for some health goods and services. Pharmaceutical prices (up 8.3 percent, year on year) and biological products including diagnostics (up 3.3 percent) stand out. It is in goods, rather than services, that producer price increases for health care stand out relative to other items. Although, there is still a remarkable difference in price changes for hospital outpatient versus inpatient services. . This may be due to hospitals’ outpatient services being pressured by competition from physicians’ practices.

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