Blog Request Analysis/Quote Schedule Meeting Call Software Support Make Payment Send Files Contact
Menu

LIFO Election Benefit Analysis

HomeResourcesLIFO Election Benefit Analysis

LIFO Election Benefit Analysis

LIFOPro makes scoping out a LIFO election easy! Why reinvent the wheel when adopting LIFO when you can partner with the leading LIFO experts? Make the decision to elect LIFO with the utmost confidence, fully understand the risks/rewards of LIFO, and simplify the LIFO due diligence process with our complimentary LIFO Election Benefit Analysis. Let the experts streamline scoping out a LIFO election, learning about how LIFO works, and understanding all the rewards and risks.

Companies obtaining a free election benefit analysis will receive a PDF report & turnkey outsourcing solutions fee quote within one week of receipt of your request. The process is quick and easy and requires a minimal amount of information that’s readily-available in your accounting system. LIFOPro offers free discovery calls before or after obtaining your benefit analysis. Request your benefit analysis today, learn more using the content below, or schedule a call/meeting with the LIFOPro team!

  • Overview

    The costing method used to value inventory is considered an accounting method or principle. Since there are multiple inventory valuation methods available, preferability must be established when changing to the LIFO method from a non-LIFO method. Because of this, companies issuing GAAP financial statements must establish that LIFO is preferable to the existing method.

    No authoritative body has established criteria for determining the preferability among alternative inventory valuation methods, but the Securities & Exchange Commission’s Staff Accounting Bulletin Topic 6.G.2b states the following:

    • In such cases, where objective criteria for determining the preferability among alternative accounting principles have not been established by authoritative bodies, the determination of preferability should be based on the particular circumstances described by and discussed with the registrant.
    • In the case of changes for which objective criteria for determining preferability have not been established by authoritative bodies, business judgment and business planning often are major considerations in determining that the change is to a preferable method because the change results in improved financial reporting.

    Furthermore, most companies use LIFO in perpetuity, and because of this, the LIFO reserve will often grow and become a materially large amount. For these reasons, companies and CPA firms should obtain or perform meticulous analysis prior to adopting LIFO for the following reasons:

    • Establish that LIFO truly is preferrable over the existing method (preferability)
    • Forecast/model LIFO’s short and long-term financial reporting and tax implications (quantify LIFO’s current & future estimated tax benefits)
    • Ensure the most favorable tax submethods are chosen (including assessing IRS audit risk amongst the available submethods)
    • Assess risks vs. rewards (cost-benefit analysis)

    Such analysis should include historical calculations, current period estimates, exploring all available submethods & preparing comparisons amongst the available submethods (such as valuing all or only certain goods using LIFO, using an internal vs. external inflation measurement source, pooling methods & determining whether the same or different book & tax LIFO submethods will be used). Additional considerations should include comparing the administrative burden and risks, outsourcing costs, and considering licensing software to automate the calculation if managed in-house.

  • LIFOPro's Benefit Analysis Grading System & Scoring Criteria

    LIFOPro uses proprietary inflation metrics and a standard grading system to establish whether or not LIFO is a preferable method for a company or given industry. From this grading system, a determination can be made regarding if a company is a good LIFO candidate, and subsequent recommendations are also provided regarding the proper timing of when to elect LIFO. Our grading system & scoring criteria is organized as follows:

    • Historical Preferability (Good LIFO candidate criteria): These criteria use past pricing metrics sourced from the Bureau of Labor Statistics Consumer/Producer Price Indexes (BLS CPI/PPI) to establish preferability as of the time of exploring a LIFO election. These are also called our “good LIFO candidate” criteria, which are as follows:
      • Inflation level – How much inflation has there been historically?
        • The inflation level is the most fundamental metric used to establish LIFO as a preferable method because higher the historical inflation level, the higher the likelihood that LIFO will create a material tax benefit and be more clearly reflective of income than other non-LIFO methods in the future.
        • LIFOPro’s inflation level requirement is to have a long-term average annual inflation rate of 1% or more. Auto dealers and supermarkets (predominant users of LIFO) have 20 year average annual inflation rates of around 1% – 2%, which is more than sufficient to establish preferability because over a 20 year period, there will have been 20% – 40% cumulative inflation, and in most cases, inflation at this level will yield material long-term LIFO tax benefits.
      • Inflation frequency – How often has inflation occurred historically?
        • Inflation frequency is another key metric used to establish LIFO as a preferable method because the more often there has been inflation in the past, the higher the likelihood that LIFO will be most clearly reflective of income & create a tax benefit in the future
        • Inflation frequency is a key LIFO risk assessment metric because there is an inverse relationship between the amount of LIFO risk and inflation frequency rate. More specifically, the lower the inflation frequency rate, the higher amount of LIFO risk. Conversely, the higher inflation frequency rate, the lower the risk. Certain industries have 20 year inflation frequency rates of 100% (inflation measured in all of the last 20 years), meaning there is little or no LIFO risk in these areas.
        • LIFOPro’s inflation frequency requirement is to have a rate of greater than or equal to 50% over the last 20 years (inflation measured in 10 or more of the last 20 years)
      • Both historical preferability criteria must be met for LIFO to be a preferable method and for a company/industry to be a good LIFO candidate. LIFO is not a preferable method and a company/industry is not a good LIFO candidate if neither or only one of the two historical preferability criteria is met.
    • Present Preferability (Current year LIFO election candidate): These criteria provide the basis of recommending either a current year LIFO election, or deferring the LIFO election to a later period, which are as follows:
      • Both historical preferability criteria met
      • Current year vs. Historical average inflation multiplier – Is the current period inflation rate greater/less than or equal to the historical average inflation rate?
        • Inflation multiplier is calculated by taking the quotient of the Current year inflation rate and the Historical average annual inflation rate
        • Current year inflation rate uses the higher of the following two options:
          • Year to date inflation: For a December year end, the year to date inflation rate at the time of this publication is 9 months ended September 2024 PPI (Sep. ’24 ÷ Dec. ’23) since the last BLS release was September PPI.
          • 1 Year inflation: For a December year end, the 1 year inflation at the time of this publication is  12M ended September 2024 PPI since the last BLS release was September PPI
        • Historical average annual inflation rate computed using the BLS PPI 20 year average annual inflation rate as of September 2024 (if available; 3/5/10 year average annual inflation rates used for BLS PPIs that have existed for less than 20 years)
        • LIFOPro’s inflation multiplier requirement is to have an inflation multiplier of greater than or equal to 1. For example, if there’s 5% inflation in 2024 & a 20 year average annual inflation rate of 2%, the inflation multiplier would be 2.5, and a current year LIFO election would be recommended.
      • Both present preferability criteria must be met for a current period LIFO election to be recommended. If the inflation multiplier is less than 1, a LIFO election recommendation is deferred to the next period where the inflation multiplier is greater than or equal to 1.

    Does the Timing of the LIFO Election Matter?

    Although LIFO can create meaningful short and long term tax benefits, there are many considerations that should be made prior to and during the implementation process. Most importantly, the timing of adopting LIFO is key for the following reasons:

    • For tax purposes, LIFO must be applied prospectively (beginning in year LIFO is adopted), and the tax benefits are directly tied to the amount of inflation measured in the year of adoption (high inflation that recently occurred in a prior period can’t be applied in the LIFO election period)
    • The size of the first year tax benefit is primarily dependent on the amount of inflation measured in the year the LIFO election is made, so the higher the inflation measured in the election year, the bigger the LIFO tax benefit will be
    • Higher tax benefits are being forfeited when electing during a low inflation period instead of doing so during a period where inflation was greater than or equal to historical levels
  • Sample LIFO Election Benefit Analysis Excerpts

    Figure 1. 20 Year Pro Forma External Index LIFO Calculation Summary (IPIC Method)

    Figure 2. Current Year LIFO Calculation Estimate & Inflation Measurement Comparison

    Figure 3. Historical & Present Preferability Score Results & Recommendations

     

    Preferability Statement

    Upon our evaluation of Sample Company’s current and historical inventory costs as of the 2024 year end and the past twenty years, it is our opinion that the LIFO method of inventory costing is preferable over Sample Company’s present method and other alternatives available because it allows for better matching of costs and revenues, as historical inflationary inventory acquisition prices are expected to continue in the future and the LIFO method uses the current acquisition prices to value the cost of goods sold. Accordingly, LIFOPro recommends for Sample Company to elect the LIFO method beginning with the 2024 year end using the submethods listed below.

    Figure 4. LIFO Submethods Recommendations

    Figure 5. 20 Year Pro Forma IPIC LIFO Taxable Income & Tax Liability Reduction Schedule

    Figure 6. Bureau of Labor Statistics Producer Price Index Historical Inflation Rates (External Index aka IPIC method)

  • LIFO Election Benefit Analysis Document Requirements

    Companies other than dealerships:

    • Current & prior period’s item detail reports – Also known as perpetual detail or stock status report. Should be readily available within accounting system and include the following fields (see document request list & sample templates contained in above file):
      • Unique identifier – Examples include item/part/tag number/code, SKU or UPC
      • Item description
      • Current period quantity on hand or weight
      • Current period unit cost
    • Completed LIFO election benefit analysis questionnaire
    • Download our LIFO Election Benefit Analysis Request List containing the questionnaire, document request list and sample item detail report template Excel sheets
    LIFO Election Benefit Analysis Document Request List

    Dealerships

    Auto Dealer LIFO Election Benefit Analysis Questionnaire Other Dealers LIFO Election Benefit Analysis Questionnaire

    Document Delivery Options

    • Email the required document(s) listed above to lifopro@lifopro.com & include LIFO election benefit analysis request in the subject line (20MB total file attachment limit)
    • File share portal

    LIFO Election Benefit Analysis Report Delivery Method & Timing

    • LIFOPro will email the complimentary LIFO Election Benefit Analysis PDF report package & fee quote within one week of receiving above documents (expedited delivery available upon request)
    • LIFOPro will also offer to schedule free discovery call/online meeting to discuss report findings, recommendations & fee quote
  • Learn More or Schedule a Free LIFO Discovery Call

    Want to learn more about LIFO, obtaining a free LIFO election benefit analysis & LIFOPro’s turnkey outsourcing solutions prior to obtaining your complimentary LIFO Election Benefit Analysis? Schedule a free LIFO discovery call or Teams meeting with LIFOPro by calling 402-330-8573, emailing lifopro@lifopro.com or using our online scheduling tool

    Schedule Free LIFO Discovery Call LIFO Discovery Call Presentation Slide Deck Sample LIFO Election Benefit Analysis Report LIFOPro's Offerings CPA Firm Offerings
  • Request Your Free LIFO Election Benefit Analysis Now!

    Request your complimentary benefit analysis report by completing & submitting the form below. You’ll receive your complimentary analysis PDF report & fee quote within one week of submitting this form.

    Click or drag files to this area to upload. You can upload up to 15 files.
    To obtain a complimentary LIFO election benefit analysis report & fee quote, please upload an item detail report (aka stock status, perpetual inventory listing or inventory valuation report) containing the following data fields: 1. Product number/code/ID (or SKU/UPC) 2. Product description 3. current period quantity on hand 4-5. current & prior period item/unit/standard costs. 6. Product hierarchies (if available, such as category, class, group, line, segment, department, type or stage of production) NOTE 1: You may send separate current period & prior period item detail reports. NOTE 2: Assuming your year end has yet to occur, use the latest available data to provide the current period documentation. For example, if you have a December year end & documentation is sent on November 15th, the current period data should be as of or close to the submittal date & the prior period data should be as of the last year closed. NOTE 3: Prior period item/unit/standard costs are not required to obtain analysis & fee quote, but your analysis will only be ran using an external inflation measurement source. NOTE 4: Provide current & prior period extended costs if quantities and/or item/unit/standard costs are unavailable.
  • LIFO Tax Savings Calculator

    Instructions:

    • Use one of the following steps to obtain an estimate of your company’s current period & historical average annual inflation rates (i.e. 3/5/10/20 year annual averages)
      • Bureau of Labor Statistics Consumer/Producer Price Index (BLS CPI/PPI) provided below (Locate the BLS CPI/PPI that most closely matches your company’s goods OR select most predominant BLS CPI/PPI if there are multiple indexes that match or included in your product mix)
      • Internally develop your best estimate based on knowledge of current & historical price trends
    • Input the following values into the blue-colored cells:
      • Prior year end inventory balance at cost
      • Current year inflation rate
      • Historical average annual inflation rate
      • Combined federal & state tax rate

    The green-colored cells will automatically update as soon as all values have been entered into the blue-colored input cells

    Output notes:

    • Current year taxable income reduction: This is also known as LIFO expense and represents the current period difference between the year end inventory value at cost (i.e. FIFO or average cost) the LIFO inventory value. It is calculated by taking the product of the prior year’s inventory balance & the current period’s inflation rate.
    • Current year after-tax cash savings: This represents the current-period or election year reduction in the current period’s income tax liability from LIFO. It is calculated by taking the product of the current period’s LIFO expense & the current period’s combined federal & state tax rate.
    • 20 year taxable income reduction: This represents the estimated cumulative taxable income reduction from LIFO over a 20 year period. It is calculated as follows:
      • by taking the product of the prior year’s inventory balance, the historical average annual inflation rate
    • 20 year Cumulative after-tax cash savings: This represents the 20 year estimated tax liability reduction from using LIFO.

    LIFO is adopted on a prospective basis & LIFO tax savings accrue beginning in the year of the change. Prior period benefits can NOT be retrospectively recaptured. 20 year cumulative taxable income reduction & after-tax cash savings shown in calculator are for analysis purposes only & is provided to forecast the long-term or future tax savings from LIFO.

    BLS PPI Inflation Rate Averages Table for Selected Commodities

     PPI CodeBLS PPI Category Description1M 11/24YTD 11/241YR 11/243YR 11/245Y 11/2410YR 11/2420Y 11/24
    01FARM PRODUCTS6.4%7.9%6.2%4.4%7.3%1.6%3.4%
    011Fruits & melons, fresh/dry vegs. & nuts23.1%21.6%18.6%4.3%5.6%3.9%3.3%
    012Grains7.7%-11.4%-10.5%-10.2%2.2%1.1%3.7%
    013Slaughter livestock2.6%18.6%14.4%14.3%11.8%1.1%4.0%
    014Slaughter poultry-0.1%1.2%11.7%6.6%10.5%2.0%3.8%
    015Raw cotton-0.8%-16.5%-13.4%-17.5%1.2%-0.3%2.0%
    016Raw milk-10.4%12.9%11.8%10.9%6.2%0.7%2.3%
    017Chicken eggs54.6%127.0%94.4%58.3%25.3%11.1%10.3%
    018Hay, hayseeds and oilseeds1.2%-22.0%-26.4%-7.1%1.7%-0.4%3.1%
    02PROCESSED FOODS AND FEEDS0.8%4.2%3.6%4.3%5.0%2.1%3.0%
    021Cereal and bakery products-0.3%-0.7%-0.6%5.3%4.9%2.7%3.2%
    022Meats, poultry, and fish2.6%9.8%9.1%2.0%5.6%1.5%2.9%
    023Dairy products-0.7%6.9%5.4%4.7%3.2%0.9%2.3%
    024Processed fruits and vegetables-1.2%0.5%0.9%9.6%7.1%4.1%3.9%
    025Sugar and confectionery1.1%11.5%11.9%9.1%5.7%3.3%3.4%
    026Beverages and beverage materials0.0%3.8%3.1%5.8%4.5%2.9%2.6%
    027Fats and oils3.7%-4.4%-7.4%-4.8%6.9%2.6%3.1%
    028Miscellaneous processed foods1.3%3.0%3.1%6.7%5.3%2.9%2.9%
    029Prepared animal feeds-0.5%-4.8%-6.1%1.1%4.2%1.0%3.7%
    03TEXTILE PRODUCTS AND APPAREL-1.1%0.0%-0.6%2.4%4.1%2.4%2.1%
    031Synthetic fibers-5.9%-1.6%-5.2%0.4%3.7%2.4%1.9%
    032Processed yarns and threads-0.1%0.7%-0.7%0.1%4.8%2.3%2.4%
    033Greige fabrics0.0%-0.6%-0.4%2.3%3.9%1.8%2.0%
    034Finished fabrics0.0%0.6%1.0%2.9%4.7%2.8%2.6%
    038Apparel & other fabricated textile prods0.0%1.9%1.9%3.8%3.3%2.2%1.9%
    039Miscellaneous textile products/services-2.5%-9.4%-7.7%3.1%6.5%2.2%1.8%
    04HIDES, SKINS, LEATHER, AND RELATED PRODUCTS0.8%-0.1%-0.3%1.6%1.8%-2.7%0.4%
    041Hides and skins, incl. cattle3.5%-8.8%-10.0%-7.1%-4.7%-12.0%-3.5%
    042Leather0.8%0.0%0.2%0.8%2.4%-4.1%-0.4%
    043Footwear0.0%1.8%1.9%4.9%4.0%2.9%2.8%
    044Other leather and related products0.5%2.2%2.2%3.7%3.2%2.5%2.1%
    05FUELS AND RELATED PRODUCTS AND POWER-2.3%-2.8%-10.1%-3.3%4.8%1.0%2.1%
    051Coal-0.2%1.3%2.6%12.9%7.4%3.8%4.9%
    053Gas fuels4.5%-10.1%-18.2%-26.4%1.6%-4.7%-4.9%
    055Utility natural gas2.6%-2.7%-1.8%-4.6%7.4%3.1%1.3%
    056Crude petroleum (domestic production)-3.8%1.5%-12.0%-6.1%3.8%-1.2%2.2%
    057Petroleum products, refined-3.6%-5.2%-17.1%-4.7%4.6%0.1%2.9%
    058Asphalt and other petroleum and coal products, n.e.c.-1.9%-11.3%-30.9%-5.7%2.4%-1.1%6.5%
    06CHEMICALS AND ALLIED PRODUCTS-0.8%1.4%0.9%-0.3%4.0%2.2%3.3%
    061Industrial chemicals-2.9%-0.4%-1.7%-4.3%4.2%0.6%2.7%
    062Paints and allied products0.3%0.8%0.6%6.1%6.4%4.0%4.0%
    063Drugs and pharmaceuticals0.1%2.4%2.4%2.8%2.4%3.7%4.4%
    064Fats and oils, inedible0.8%11.3%7.6%-2.1%11.8%4.0%5.2%
    065Agricultural chemicals and chemical products0.9%0.7%0.9%-2.3%6.1%2.0%3.3%
    066Plastic resins and materials-0.6%3.1%2.8%-5.7%3.7%0.3%2.1%
    067Other chemicals and allied products0.0%0.9%1.0%5.3%4.6%2.9%2.9%
    07RUBBER AND PLASTIC PRODUCTS-0.3%0.9%1.1%2.7%5.4%2.9%3.1%
    071Rubber and rubber products-0.4%2.0%1.8%4.3%4.6%2.4%3.0%
    072Plastic products-0.3%0.6%0.9%2.3%5.6%3.1%3.2%
    08LUMBER AND WOOD PRODUCTS0.3%1.4%1.4%-0.2%4.9%2.9%2.2%
    081Lumber2.0%9.4%9.3%-4.3%4.6%2.2%1.5%
    082Millwork-0.1%1.4%0.9%2.6%6.1%4.2%3.0%
    083Plywood-0.4%-4.6%-5.7%-1.4%6.8%2.4%2.2%
    084Other wood products-0.1%-3.4%-2.0%-0.1%3.4%2.5%2.2%
    085Logs, bolts, timber, pulpwood, woodchips and other roundwood products-0.2%-1.5%-2.2%-0.7%1.8%0.7%1.4%
    086Prefabricated wood buildings & components-0.5%1.2%1.5%3.8%7.4%5.0%3.3%
    087Treated wood and contract wood preserving0.8%-0.3%0.8%5.0%5.8%3.1%2.7%
    09PULP,PAPER, AND ALLIED PRODUCTS0.0%3.4%2.7%3.8%5.8%3.1%2.7%
    091Pulp, paper, and prod., ex. bldg. paper-0.4%3.9%2.9%2.9%5.6%2.8%2.8%
    092Building paper & building board mill prods.10.6%-0.6%-2.4%-4.8%10.2%5.4%3.3%
    094Publications, printed matter & printing material0.0%2.5%2.6%7.4%6.0%3.5%
    10METALS AND METAL PRODUCTS0.4%-0.3%1.6%-2.4%7.5%3.8%3.4%
    101Iron and steel0.8%-9.6%-5.9%-11.8%7.8%2.8%2.5%
    102Nonferrous metals-0.7%8.5%10.6%1.2%7.7%3.9%4.3%
    103Metal containers-0.4%0.2%0.2%5.1%6.7%4.0%3.3%
    104Hardware0.2%0.4%0.0%2.3%5.0%3.2%2.9%
    105Plumbing fixtures and fittings0.0%1.6%1.6%4.3%4.0%3.0%2.9%
    106Heating equipment0.0%2.3%2.5%6.9%7.4%5.0%4.3%
    107Fabricated structural metal products1.2%-0.8%0.4%2.4%9.2%5.4%3.9%
    108Miscellaneous metal products0.5%3.1%3.0%4.7%5.4%3.2%2.7%
    11MACHINERY AND EQUIPMENT0.1%2.8%2.7%5.4%4.7%2.8%1.9%
    111Agricultural machinery and equipment0.2%1.0%1.1%6.0%6.2%3.8%3.3%
    112Construction machinery and equipment0.2%1.0%1.7%6.0%5.7%3.6%3.2%
    113Metalworking machinery and equipment0.0%3.4%3.5%6.1%4.9%3.1%2.5%
    114General purpose machinery and equipment0.0%3.2%3.0%7.5%6.7%4.4%3.8%
    115Electronic computers and computer equipment-0.8%1.4%2.1%56.0%30.6%12.6%3.0%
    116Special industry machinery and equipment0.0%2.8%2.9%6.0%6.1%3.7%2.6%
    117Electrical machinery and equipment0.2%2.6%2.5%3.9%3.4%2.0%1.0%
    118Miscellaneous instruments0.4%3.8%3.9%6.3%4.6%3.2%2.5%
    119Miscellaneous machinery0.1%2.7%2.6%4.6%3.6%2.2%2.3%
    12FURNITURE AND HOUSEHOLD DURABLES0.0%1.5%1.1%3.8%4.6%3.1%2.4%
    121Household furniture0.0%1.4%1.4%2.8%4.3%3.1%2.6%
    122Commercial furniture0.0%2.9%2.3%5.9%6.3%4.2%3.3%
    123Floor coverings-1.2%2.2%0.8%0.6%1.9%1.6%2.1%
    124Household appliances-0.3%-1.3%-1.6%3.6%3.8%2.5%1.9%
    125Home electronic equipment0.0%1.5%1.5%3.1%3.8%2.1%0.0%
    126Other household durable goods1.4%2.5%2.4%3.9%4.7%2.9%2.2%
    13NONMETALIC MINERAL PRODUCTS-0.2%3.5%3.6%7.3%6.3%4.3%4.0%
    131Glass-2.6%-1.3%-0.5%3.6%3.9%3.3%2.1%
    132Concrete ingredients and related products0.2%6.9%7.2%9.1%7.1%5.5%4.7%
    133Concrete products0.4%3.8%3.7%8.8%7.3%5.3%4.3%
    134Clay construction products ex. refractories0.9%1.4%1.3%5.0%4.4%2.8%2.1%
    135Refractories0.3%2.0%2.4%5.5%4.7%3.7%3.9%
    136Asphalt felts and coatings-1.3%1.1%1.3%5.3%6.9%3.8%5.3%
    137Gypsum products0.5%5.5%5.2%6.5%8.6%5.0%4.2%
    138Glass containers-0.2%7.3%7.2%9.0%7.1%4.3%3.6%
    139Other nonmetallic minerals-0.3%3.0%2.8%6.7%5.3%2.9%3.9%
    14TRANSPORTATION EQUIPMENT0.2%1.7%1.7%2.8%2.6%1.7%1.6%
    141Motor vehicles and equipment0.2%1.1%1.0%2.4%2.4%1.6%1.3%
    142Aircraft and aircraft equipment0.2%3.6%3.8%3.9%2.9%2.0%2.3%
    143Ships and boats0.1%1.7%1.8%3.6%3.2%2.4%2.5%
    144Railroad equipment0.2%0.3%0.3%0.2%1.2%0.9%2.0%
    149Transportation equipment, n.e.c.-0.1%-1.6%-1.8%2.4%3.1%2.5%1.8%
    15MISCELLANEOUS PRODUCTS0.9%5.7%6.0%6.6%5.7%4.2%3.4%
    151Toys, sporting goods, small arms, etc.0.0%3.0%2.9%6.6%6.0%3.6%2.6%
    152Tobacco products, incl. stemmed & redried1.9%11.6%11.5%11.1%9.5%7.6%6.2%
    153Notions0.0%-0.1%1.8%4.2%4.9%3.1%3.6%
    154Photographic equipment and supplies9.6%8.6%17.3%7.9%6.0%3.8%3.1%
    155Mobile homes0.1%1.6%0.8%3.1%8.4%6.2%4.6%
    156Medical, surgical & personal aid devices0.3%2.0%2.2%3.0%2.2%1.6%1.3%
    157Other industrial safety equipment0.1%3.7%3.7%6.0%5.6%3.2%2.5%
    159Other miscellaneous products-0.3%4.7%5.3%6.9%6.2%4.3%3.1%

    BLS CPI Historical Annual Inflation Rate Averages For Selected Categories

    BLS CPI CodeBLS CPI Category Description1M 11/241Y 11/243Y 11/245Y 11/2410Y 11/2420Y 11/24
    SAFFOOD & BEVERAGES0.1%2.3%2.3%5.1%5.0%3.0%
    SAF11Food at home-0.1%1.6%1.6%5.0%5.0%2.5%
    SAF114Nonalcoholic beverages & beverage materials0.5%2.7%2.8%6.2%5.4%2.8%
    SEFNJuices & nonalcoholic drinks0.4%2.6%3.1%6.5%5.8%3.3%
    SEFN01Carbonated drinks-0.2%2.6%3.1%6.4%6.3%3.8%
    SEFN03Nonfrozen noncarbonated juices & drinks0.9%2.3%2.9%6.4%5.4%2.9%
    SEFPBeverage materials including coffee & tea0.6%3.0%2.2%5.5%4.3%1.8%
    SEFP01Coffee1.0%3.4%1.9%5.3%4.4%1.6%
    SEFP02Other beverage materials including tea0.1%2.4%2.6%6.0%4.2%2.2%
    SAF115Other food at home-0.4%0.7%0.7%5.8%5.2%2.8%
    SEFT06Other miscellaneous foods-0.1%0.3%-0.1%5.7%5.0%2.6%
    SEFWAlcoholic beverages at home-0.4%1.2%1.1%2.3%2.2%1.4%
    SEFW01Beer, ale & other malt beverages at home-0.2%2.5%2.6%4.3%3.6%2.5%
    SEFW02Distilled spirits at home-0.1%0.5%0.1%1.0%1.8%0.8%
    SEFW03Wine at home-0.8%0.3%0.2%1.2%1.2%0.7%
    SEHEFUEL OIL & OTHER FUELS-0.2%-7.4%-10.7%0.7%4.8%1.2%
    SAH3HOUSEHOLD FURNISHINGS & OPERATIONS0.0%0.8%0.4%3.0%3.6%1.9%
    SAAAPPAREL-2.7%3.0%1.1%1.9%1.0%0.0%
    SAM1MEDICAL CARE COMMODITIES-0.1%0.5%0.4%2.8%1.5%1.7%
    SEMFMedicinal drugs-0.1%0.5%0.3%2.7%1.5%1.7%
    SEMF01Prescription drugs-0.4%1.1%0.7%2.1%1.1%1.8%
    SEMF02Nonprescription drugs0.6%-0.5%-0.4%4.2%2.3%1.2%
    SEMGMedical equipment and supplies-0.4%-0.1%1.2%4.5%1.4%1.0%
    SARRECREATION0.2%1.1%1.5%2.9%2.7%1.9%
    SEEAEDUCATIONAL BOOKS & SUPPLIES6.3%9.0%10.6%3.5%2.2%1.8%
    SEGATOBACCO & SMOKING PRODUCTS1.0%6.7%6.6%6.9%6.8%5.7%
    SEGBPERSONAL CARE PRODUCTS-0.1%1.6%0.5%4.0%2.2%1.0%
    SEGEMISCELLANEOUS PERSONAL GOODS-0.6%-2.0%-2.4%2.5%2.3%0.2%
    SAGOTHER GOODS AND SERVICES0.3%3.6%3.4%5.3%4.4%3.3%
    SEREOther recreational goods-1.2%-2.4%-3.1%-1.0%-1.1%-3.8%
    SERGRecreational reading materials-4.9%-0.9%-1.3%0.9%1.5%1.7%

Resources

CPA Firm Partnership Playbook
Read more
2024 Top LIFO Election Candidates Guide
Read more
Sec. 473 Relief Estimate Request Form
Read more
Auto Dealer IPIC LIFO Case Study
Read more
2024 LIFO Opportunities & Strategies Guide
Read more
How LIFO Works: A Beginner’s Guide to LIFO
Read more
How to Identify Clients that are Good LIFO Election Candidates
Read more
How to Easily Implement LIFO
Read more
Complimentary Interim LIFO Estimate Request Form
Read more
Best LIFO Practices & Review
Read more
Auto Dealer LIFO Case Study
Read more
LIFO Election Benefit Analysis
Read more
Downloads

Get information about LIFO-PRO’s offerings, valuable guides & white papers & sample LIFO reports!

Read more
IPIC LIFO Guide

Get educated on the Inventory Price Index Computation (IPIC) method, including the origins, advantages & disadvantages, calculation procedures, options & much more!

Read more
Service Organization Control Report

Learn how LIFO-PRO receives an annual review of our policies & procedures to provide required assurances to our clients.

Read more
LIFO Tax Benefit Calculator

Calculate the potential tax savings from using LIFO & determine your company’s historical inflation percentages!

Read more
Secure File Upload Portal

Here you can send us all files needed for us to seamlessly give you the best LIFO results possible. We look forward to working with you!

Read more
CPA Firm LIFO Opportunities & Training Guide

Learn about LIFO opportunities abound for CPA firms, how to increase the scope of your LIFO offerings & learn how to easily identify good LIFO candidates!

Read more
Interim Estimate Options

Learn how to easily make interim LIFO estimates manually or within our software!

Read more
Non-disclosure Agreement Request Form

Get a NDA generated electronically in less than a minute using LIFO-PRO’s online request form page & avoid having to print, sign & scan a paper NDA!

Read more
IPIC LIFO Resources

Learn how the IPIC LIFO Method works, find valuable Bureau of Labor Statistics (BLS) links and stay up to date on all changes related to the IPIC Method!

Read more
LIFO Success Stories

Learn about LIFOPro’s past roles in partnering with companies & CPA firms to deliver great value by finding solutions to the most challenging LIFO issues!

Read more
IPIC LIFO Overview

The Inventory Price Index Computation (IPIC) method allows taxpayers to use published external indexes to calculate inflation for the purpose of valuing LIFO inventories.

Read more
Authoritative Guidance & LIFO Methods

Your comprehensive resource for authoritative LIFO guidance, LIFO election requirements, and method alternatives!

Read more
Supermarket Physical Count Procedures

Find helpful information on how IRS regulations effect grocery LIFO Count Procedures for CPI & PPI taxpayers on our Supermarket Count Procedures page.

Read more
Special Challenges for Supermarkets

Supermarkets face LIFO calculation issues unique to the industry. Find out why & answers to how they are dealt with Special Challenges for Supermarkets page.

Read more
Why the Double-extension LIFO Index Calculation Method is Unreliable

Facts describing why the double-extension LIFO index calculation method is unreliable and examples proving how this method creates unpredictable results.

Read more
LIFO Training & Audit Guide

The LIFO Inventory Training Basics & Audit Guide provides detailed LIFO calculation steps, LIFO documentation procedures, internal controls & audit best practices.

Read more
Addition of Services Table 9 Codes

Find recent important changes & BLS addition of Table 9 Wherever-provided Services & Construction PPI Indexes & Important Change in PPI Code Structure page.

Read more
CPI Category Updates

Find information on CPI Category Changes & Bureau of Labor Statistics Consumer Price Index update information such as new medical commodity codes here!

Read more
PPI Category Updates

Learn IRS Regulations Requirements for missing PPI Indexes, procedures for reassigning discontinued PPI Categories at LIFO-PRO’s PPI Category Changes page.

Read more
Producer Price Index Usage by Supermarkets to Increase Tax Deferral

Learn how drugs, non-foods & food/beverage indexes cause increase LIFO tax benefits at our PPI Index Usage by Supermarkets to Increase Tax Deferral page.

Read more
Consumer/Producer Price Index Inflation History

Get the most up to date Bureau of Labor Statistics Consumer & Producer Price Index inflation data from LIFOPro!

Read more
IPIC LIFO Advantages

Switching from the double-extension to link-chain method? Want to achieve higher possible inflation indexes? Learn more at the IPIC LIFO Advantages page.

Read more
LIFO Repeal Updates

Get the latest LIFO repeal updates including the latest news on corporate tax reform at LIFO-PRO’s LIFO Repeal Updates page.

Read more
Videos

LIFO-PRO Company Overview – Quick 1 minute video explaining LIFO-PRO’s service and software offerings.

Read more
Request Forms Page

Request a software trial, LIFO Election Benefit Analysis, Best LIFO Practices Methods Review or cost estimate. All of our requests are complimentary & free of obligation!

Read more
FAQ’s

View some of our frequently asked questions to learn more about LIFO

Read more
LIFO Glossary

Accounting and financial professionals who work with LIFO need to understand the jargon associated with LIFO. Below are a number of LIFO-related terms.

Read more
What Makes a Good LIFO Candidate?

Get answers to who should use the LIFO method, how much LIFO may benefit your company or client & good LIFO candidates by industry & principal business activity along with historical inflation data.

Read more
Why Use LIFO & How it Works

Hundreds of companies & CPA firms utilize our LIFO outsourcing solutions or the LIFO-PRO software for turnkey LIFO solutions.

Read more

Make the decision to elect LIFO with the utmost confidence, fully understand the risks/rewards of LIFO, and simplify the LIFO due diligence process with our complimentary LIFO Election Benefit Analysis Report. This comprehensive case study uses proprietary inflation metrics to forecast your client’s election year and long-term tax benefits of LIFO and includes recommendations regarding whether a LIFO election should be made or deferred, and recommendations on the most practical and beneficial methods to use.

Subscribe Today

Sign up today to receive industry news & promotional offers from LIFO-PRO

Sign Up

https://lifopro.com/resources/lifo-election-benefit-analysis/