Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / How Your Raise Is Finally Beating Streaming and Subscription Costs
Transcript
- Lucas: So there's this one category in the latest CPI report that caught my eye, and it's not rent, it's not groceries, it's not gas. It's streaming services and digital subscriptions. And for the first time in a while, your raise is actually pulling ahead of what you're paying for Netflix, Spotify, and the rest. Luna: Interesting. Because for years it felt like every quarter another service was jacking up its price by a dollar or two. Are we finally seeing a ceiling? Lucas: It looks that way. The May CPI data, released just a few weeks ago, shows the overall index at 334.0. That's up about 2.9 percent year over year. But the sub-index for 'recreation services,' which includes streaming, cable, and digital subscriptions, rose only about 2.8 percent. Meanwhile, average hourly earnings hit $37.50 in May, up 3.5 percent from a year ago. Luna: So wages are growing faster than streaming prices. That's a reversal from, say, 2022 or 2023, when those price hikes were eating into any raise you got. Lucas: Exactly. Back in 2022, streaming inflation was running closer to 6 or 7 percent annually. Netflix raised its standard plan from $15.49 to $15.99, then the next year to $17.99. Disney Plus went from $7.99 to $10.99 in a couple of years. Those were big jumps relative to wage growth that was lagging at 4 percent or so. Now the shoe is on the other foot. Luna: What's driving the moderation? Is it just market saturation? Lucas: Largely saturation. The big streaming services have added most of the subscribers they're going to get in the U.S. Netflix has about 80 million domestic subscribers; it's not growing much. So instead of raising prices aggressively and risking churn, they're leaning into ad-supported tiers to capture price-sensitive customers. That keeps the headline price increases smaller. Luna: Right, and that ad tier is cheaper. So if you're willing to watch commercials, your effective cost is even lower. Lucas: Exactly. The ad-supported Netflix plan is $6.99 a month, and it's been that price since launch. Disney Plus with ads is $7.99. So the average revenue per user actually goes up through ads, not through price hikes. And that keeps the CPI component dampened. Luna: And it's not just streaming. Spotify raised its premium plan by a dollar last year, but that's been it. Music streaming prices have been pretty stable. Lucas: Right. The broader 'subscription economy' — which includes everything from cloud storage to meal kits — is seeing a similar pattern. Competition is fierce. Companies know that consumers are more price-sensitive now, especially with inflation still running above 2 percent overall. So they're being careful. Luna: Let's talk about what this means for the average worker. If your raise is 3.5 percent, and streaming costs are only going up 2.8 percent, you've got a little extra buying power left over. It's not a huge amount, but it's real. Lucas: It's real, and it's one of the few categories where that's true. Rent is still rising faster than wages in many markets. Grocery inflation is running about 2.2 percent, so wages are ahead there too, but services like car insurance and healthcare are still stubbornly high. So streaming is kind of a bright spot. Luna: If today was actually useful to you, the way these stay ad-free is listener support — buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small gesture that helps us keep digging into data like this. And we appreciate it. Luna: Okay, so back to streaming — do you think this trend holds? Or could we see another wave of price hikes once the economy stabilizes? Lucas: I think the days of double-digit annual increases in streaming are probably behind us. But I wouldn't rule out occasional bumps. The industry is still investing heavily in content — Netflix is spending $17 billion this year on programming. That money has to come from somewhere. But with ad revenue growing, they have another lever to pull. Luna: So the key takeaway: your raise is finally beating something that used to be a constant drain on your wallet. That's a small win worth acknowledging. Lucas: Absolutely. And if you're looking at your own budget, it's worth checking whether you're still paying for services you don't use. Because even if prices aren't spiking, every subscription adds up. But for once, the math is on your side. Luna: Next episode, we'll look at another category that's turning in workers' favor. Until then, keep an eye on those monthly statements. Lucas: Thanks for listening.