Reading A Graph Between the Lines

This is a recent update to something that we've talked about here over the years: Compounded inflation from Jan. '00 to June '21 in several different categories of goods and services.  I think it's very illustrative. 

That's US Consumer Price inflation for 15 different things; and some categories are broader than others, but the overall changes in price go from up over 200% to down (guessing) 95%.  

It also shows from top to bottom the things that are highly government regulated (another way of saying there's no free market working) down to consumer goods that are regulated much more lightly (saying the free market if functioning fully).  

College tuition and fees are virtually untouched by the market economy.  The number of real classroom seats to put equally real student butts into is far smaller than the number of those butts.  In a free market, that supply/demand imbalance tends to raise prices but only a small number of students say "that's too much" and looks for other career options.  For those who don't look elsewhere, the fed.gov has guaranteed that grants, scholarships, and loans are available to pay for those seats regardless of the costs.  Or as we've just seen with graduate students, the Fed.gov just guarantees they'll pay back the loan regardless of what the student does, essentially making graduate schools free to anyone who reads their contracts. 

BTW, the leveling off of college textbook prices is surprising and unprecedented.  Nobody knows quite what to make of that other than to point out how remarkable it is.

Hospitalization and medical care services are likewise backed up by government edict as well as government direct payment, both Federal (e.g. Medicare) and state (Medicaid).  The effect of private insurance is harder to pin down because it's susceptible to market forces but only weakly compared to the patient picking the service and provider directly.  The insurance carriers compete to sell to the employers buying coverage, so there is some market there.  (In most instances, health insurance isn't bought directly by the person using it, rather it most often comes as a benefit with employment.)  The problem is that a third party (the contracted insurance company) doesn't have as much at stake as an individual buying their own healthcare. 

The lowest of the rising prices have been tied between Housing and Food and Beverages for the entire time; these are strongly competed for, but government programs for housing low income people affect the market, as does food relief (Food stamps/EBT cards).  

The most free market is for home electronics, and they pick TVs in particular.  I think most people might guess this and the world is full of stories of how much the prices for LED TVs dropped over the years.  In comparison to computers, for example, computers tend to have a harder to evaluate price for some level of performance.  Prices aren't in free fall or dropping in half every couple of years, but the buyer gets more for their money; maybe more processor cores, or more memory, faster solid state drive or other upgrades.   

Since "cellphone services" (I read the word "contracts") are full of government mandatory fees, I'm moderately surprised they say the prices have come down as much as they're saying.  Similarly, the prices of new cars are all affected by government mandates, but there haven't been any major changes going into effect over the period - say like increasing mandatory fuel efficiencies or other high cost demands.

In essence you can read this plot as reflective of the total effect of market intervention.  The higher the inflation, the more the government distorts the free markets, while the lower, the freer the market.  It's not a completely perfect correlation but it's a good one.