Other Goods & Services CPI: Why e.l.f. Soars When Personal Care Inflates
The smallest CPI component (2.9%) hides the biggest surprise: value beauty crushes luxury when inflation runs hot. Tobacco wins the "Elevated" regime; e.l.f. dominates "High."
The Trade: Personal Care Inflation Positioning
Current Setup
- Other Goods CPI: +4.08% YoY (Elevated)
- Current Regime: 3-5% inflation band
- Historical Frequency: 14% of quarters
Positioning
- Overweight: PM, MO (tobacco), SCI
- Hold: ULTA, ELF (watch for "High" regime)
- Underweight: EL, COTY (luxury struggles)
Historical Edge
In Elevated regime, PM averages +7.89%/qtr vs EL at -0.89%. Tobacco's pricing power shines when personal care costs rise. ELF explodes (+24%/qtr) if inflation pushes above 5%.
Other Goods & Services CPI: 15-Year History
YoY change showing the 2022-2023 inflation spike and current elevated regime
Source: BLS Consumer Price Index (CUSR0000SAG). Quarterly averages of monthly YoY changes.
"Other Goods and Services" is the CPI component no one talks about. At just 2.9% of the index, it's easy to ignore. But within this category lies a fascinating divergence: tobacco products, personal care services, funeral expenses, and miscellaneous goods that move independently of headline inflation.
For 15 years (2010-2025), this component spent 69% of its time in "Normal" regime (1-3% YoY). Then 2022 happened. Other Goods CPI surged above 5% for 10 consecutive quarters—and the stock market's reaction was not what you'd expect. Luxury beauty cratered. Value beauty exploded.
Why This Matters Now
We're currently in the "Elevated" regime (3-5% YoY) at 4.08%. This is tobacco's sweet spot: PM averaged +7.89%/quarter in this regime. If inflation pushes above 5%, the playbook shifts dramatically—value cosmetics (ELF) become the trade.
I. What's Inside "Other Goods & Services"?
This CPI component captures a miscellaneous basket that doesn't fit elsewhere:
- Personal care products: Cosmetics, hair care, grooming products
- Personal care services: Haircuts, spas, beauty treatments
- Tobacco products: Cigarettes, cigars, vaping products
- Miscellaneous personal services: Legal services, funeral expenses, financial services
The common thread? These are non-essential services with high pricing power. When a funeral home raises prices, demand doesn't drop. When Philip Morris hikes cigarette prices, addicted consumers pay. This creates a category with unusual inflation persistence.
Other Goods CPI: 15-Year Time Series
Quarterly YoY changes showing regime classification. Note the remarkable stability until 2021.
| Year | Q1 | Q2 | Q3 | Q4 | Year Avg |
|---|---|---|---|---|---|
| 2010 | +6.76% | +2.72% | +2.61% | +1.89% | +3.50% |
| 2011 | +1.88% | +1.65% | +0.97% | +1.73% | +1.56% |
| 2012 | +1.65% | +1.92% | +2.21% | +1.63% | +1.85% |
| 2013 | +1.72% | +1.75% | +1.57% | +1.65% | +1.67% |
| 2014 | +1.90% | +1.77% | +1.67% | +1.73% | +1.77% |
| 2015 | +1.57% | +1.45% | +1.72% | +1.94% | +1.67% |
| 2016 | +1.83% | +2.01% | +2.10% | +1.94% | +1.97% |
| 2017 | +1.95% | +2.48% | +2.23% | +2.32% | +2.25% |
| 2018 | +2.44% | +2.38% | +2.16% | +2.02% | +2.25% |
| 2019 | +2.03% | +1.40% | +2.12% | +2.58% | +2.03% |
| 2020 | +2.78% | +2.66% | +2.39% | +2.01% | +2.46% |
| 2021 | +2.22% | +2.62% | +3.27% | +4.36% | +3.12% |
| 2022 | +5.32% | +6.24% | +6.61% | +6.62% | +6.20% |
| 2023 | +6.13% | +6.54% | +5.94% | +5.79% | +6.10% |
| 2024 | +5.05% | +4.06% | +3.91% | +3.32% | +4.09% |
| 2025 | +3.15% | +3.70% | +3.96% | +4.08% ← Current | +3.72% |
Regime colors: Normal (1-3%) = neutral, Elevated (3-5%) = yellow, High (>5%) = green/red based on direction.
II. The Four Regimes
We classify Other Goods CPI into four regimes based on YoY inflation:
- Low (<1%): Rare—only 1 quarter (Q3 2011). Personal care deflation.
- Normal (1-3%): 44 quarters (69%). The "steady state" for this category.
- Elevated (3-5%): 9 quarters (14%). Current regime since Q1 2024.
- High (>5%): 10 quarters (16%). The 2022-2023 inflation spike.
What's striking is how stable this component normally is. From 2011 to 2020, it never left the "Normal" regime. Then the post-pandemic inflation surge pushed it into unprecedented territory—creating a natural experiment for how stocks respond.
Stock Performance by Other Goods CPI Regime
Quarterly returns (%) across personal care, tobacco, and funeral services stocks. 64 quarters of data.
| Regime | Beauty & Personal Care | Tobacco | Consumer Staples | Funeral | |||||
|---|---|---|---|---|---|---|---|---|---|
| CPI Level | ULTA | EL | ELF | PM | MO | PG | CL | COTY | SCI |
| Low (<1%) | -4.53 | -16.39 | n/a | -5.41 | +2.61 | -0.90 | +0.92 | n/a | -23.30 |
| Normal (1-3%) | +8.00 | +6.78 | +3.78 | +3.31 | +4.02 | +2.77 | +2.52 | +3.88 | +5.67 |
| Elevated (3-5%) ← Current | +4.35 | -0.89 | +0.72 | +7.89 | +5.33 | +1.92 | +0.46 | -11.89 | +4.67 |
| High (>5%) | +5.02 | -4.22 | +24.15 | +0.98 | +1.07 | +0.60 | +1.37 | +3.00 | +2.44 |
Returns are quarterly averages. n/a = insufficient data (ELF IPO in 2016, COTY restructured). Strong highlighting for values > |5%|.
III. The Surprise: Value Beauty Dominates in High Inflation
The most counterintuitive finding: e.l.f. Beauty (ELF) averaged +24.15% per quarter during the "High" inflation regime. That's not a typo. While luxury beauty brand Estée Lauder (EL) crashed -4.22% quarterly, the $8 mascara company thrived.
Why? Three factors:
The Value Beauty Thesis
- Trade-down effect: When personal care prices surge, consumers don't stop buying cosmetics—they switch to cheaper alternatives. ELF at $8 beats EL at $40.
- Social media tailwinds: TikTok-driven viral products disproportionately favor affordable "dupes" over luxury originals.
- Pricing power retention: ELF maintained unit volumes while raising prices. EL saw volume declines that exceeded price increases.
Tobacco: The Elevated Regime Winner
Philip Morris (PM) and Altria (MO) dominate the "Elevated" regime (3-5% inflation). PM averaged +7.89% quarterly—the best single-stock performance in any regime.
The logic is straightforward: tobacco has extreme pricing power. When the category inflates 3-5%, tobacco companies are the ones inflating it. Unlike discretionary personal care, cigarette demand is inelastic. Higher prices flow directly to margins.
But notice what happens in "High" inflation: tobacco returns compress to +0.98% (PM) and +1.07% (MO). At 5%+ inflation, even addicted consumers find substitutes or reduce consumption. The sweet spot is Elevated, not High.
Luxury Beauty: Only a Normal Regime Play
Estée Lauder (EL) tells the opposite story. In "Normal" regime, it averaged +6.78% quarterly—excellent performance. But the moment inflation accelerates:
- Elevated regime: -0.89%/qtr
- High regime: -4.22%/qtr
Luxury personal care is a "Normal only" trade. When consumers feel inflation pressure on everyday items, prestige cosmetics are among the first discretionary cuts.
Stock Fundamentals Snapshot
Current valuation and profitability metrics for Other Goods & Services-exposed stocks.
| Symbol | Sector Focus | Mkt Cap ($B) | P/E | Net Margin | D/E |
|---|---|---|---|---|---|
| PG | Consumer Staples | $347.1B | 19.7x | 20% | 0.67 |
| PM | Tobacco | $244.1B | 18.2x | 30% | n/a |
| BTI | Tobacco | $122.1B | 4.2x | 40% | 0.75 |
| MO | Tobacco | $98.1B | 11.7x | 50% | n/a |
| CL | Personal Care/Staples | $64.1B | 22.0x | 10% | 9.84 |
| EL | Prestige Beauty | $32.7B | 169.3x | 0% | 2.42 |
| ULTA | Beauty Retail | $23.4B | 25.2x | 10% | 0.98 |
| CHD | Personal Care/Staples | $20.5B | 29.4x | 10% | 0.52 |
| SCI | Funeral Services | $11.3B | 25.2x | 10% | 3.21 |
| ELF | Value Beauty | $4.4B | 573.8x | 0% | 0.00 |
| COTY | Mass Market Beauty | $3.1B | n/a | -10% | 1.15 |
Current Stock Performance
Recent returns and relative performance for Other Goods & Services stocks.
| Symbol | Category | YTD | 1Y | 3M | 6M | vs SPY YTD | RSI |
|---|---|---|---|---|---|---|---|
| ELF | Value Beauty | +17.1% | -33.5% | -35.0% | -20.2% | +17.8% | 70 |
| NUS | Supplements | +15.0% | +62.9% | +3.5% | +29.8% | +15.7% | 73 |
| ULTA | Beauty Retail | +11.7% | +63.5% | +26.6% | +35.8% | +12.4% | 90 |
| CHD | Personal Care Staples | +9.9% | -12.5% | +4.1% | -4.2% | +10.6% | 72 |
| EL | Prestige Beauty | +9.3% | +48.6% | +13.6% | +33.5% | +10.0% | 66 |
| CL | Personal Care Staples | +8.1% | -1.2% | +8.0% | -0.7% | +8.8% | 74 |
| MO | Tobacco | +6.1% | +25.8% | -6.0% | +5.5% | +6.8% | 66 |
| SCI | Funeral Services | +5.6% | +8.7% | +0.1% | +7.4% | +6.3% | 71 |
| PM | Tobacco | +4.2% | +43.2% | +5.8% | -6.5% | +4.9% | 58 |
| PG | Consumer Staples | +2.6% | -6.0% | -2.2% | -4.5% | +3.3% | 56 |
| COTY | Mass Market Beauty | +1.9% | -56.4% | -27.6% | -34.2% | +2.7% | 56 |
| BTI | Tobacco | -0.5% | +64.7% | +9.1% | +10.3% | +0.2% | 50 |
Data as of latest close. RSI > 70 = overbought, RSI < 30 = oversold.
IV. Investment Framework
The Other Goods CPI regime dictates a clear rotation strategy:
Normal Regime (1-3%): Broad Beauty Exposure
When personal care inflation is contained, both luxury and value beauty outperform. ULTA (+8.00%/qtr) and EL (+6.78%/qtr) lead. This is the regime for diversified beauty exposure.
Elevated Regime (3-5%): Tobacco Dominates
The current regime. Tobacco's pricing power makes PM and MO the clear winners. Avoid luxury beauty (EL) and mass-market cosmetics (COTY) which struggle when consumers feel pinched.
High Regime (>5%): Value Beauty's Moment
If Other Goods CPI pushes above 5%, rotate aggressively into value beauty. ELF's +24%/qtr performance in High regime is the standout trade. The trade-down effect is real and powerful.
Avoid in Higher Inflation:
The Verdict
At 4.08% YoY, we're in "Elevated" territory—tobacco's sweet spot. But stay alert: another inflation leg higher would trigger a rotation to value beauty.
- Current positioning: Overweight PM, MO, SCI
- Watch for regime shift: If Other Goods CPI > 5%, pivot to ELF
- Avoid: EL, COTY until we return to Normal regime
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Methodology Notes
Other Goods & Services CPI data from BLS series CUSR0000SAG. Stock returns calculated quarterly from adjusted close prices. Regime thresholds: Low (<1%), Normal (1-3%), Elevated (3-5%), High (>5%). All returns are arithmetic averages. ELF data starts Q1 2016 (IPO). COTY data starts Q1 2013 (restructuring).