The existing correlation between the CPI of OTC drugs and other goods and services

Abstract

This paper examines the link between the consumer price index (CPI) of over-the-counter (OTC) drugs and other goods and services in the Czech Republic. Private label OTC drugs have been sold on the Czech market since 2013. Taking their brief historic overview into consideration, their advantage is a lower price compared to OTC brand drugs. A lower price should produce a greater benefit over time in the period of an increasing CPI, especially the CPI of categories with the highest weight. To discover if there is a relation between the OTC drug category and some of the highest weight categories, a linear correlation analysis among CPI variables was used. Although the results indicate that the CPI of OTC drugs correlates with the CPI of some of the categories with the highest weight, it is not a general rule applicable to all categories. The inverse relation appears in the categories of communication, transport, prescription drugs, food and non-alcoholic beverages and furnishings, household equipment and routine maintenance of the house. According to these results, consumers tend to pay less for the OTC drugs in the periods of time when they pay more for the categories mentioned above. Contrarily, a correlation with miscellaneous goods and services, alcoholic beverages and tobacco, restaurants and hotels, education, clothing and footwear and recreation and culture exists. After linking these results with the weight of individual categories, the results confirmed that the inverse relationship shows up in the category of food and non-alcoholic beverages and transport category and vice versa mainly in the category of alcoholic beverages and tobacco. However, considering the success of the private label products in other categories private label drugs have potential on the Czech market regardless if there is an increase in CPI or not.