as the government tell us, why are all my utility and grocery bills escalating? And why are we paying nearly $5 per box of cereal when the cost of grains is tanking? And why are milk and ice cream prices going up because of the dairy industry’s proclaimed “butter fat” shortage when a large part of the sales are for reduced fat dairy products? Gas prices went down immediately after several outspoken congressional types started mumbling about “windfall profit taxes”.
The rant is finished and the question is: anyone out there in the teeming millions who can point me to a source for the changes in government’s “market baskets” used to measure inflation? The CPI list began in 1913 but the BLS does not know what items were first used to measure inflation - anyone know of a source for this? Or a listing of the changes to the market baskets? I think they have been changed at least three times in the past decade but have not been able to locate the dates or changes.
Well, in part because your grocery prices aren’t the only things, or even the major things counted when calculating inflation. Energy prices are a major one, and aside from the short-term spike here and that have been declining in real dollars. Computers and other high-technology products are decreasing in price. Many other industrial commodoties are as well. And sure, lots of things are going up, too. When it all comes out in the wash, you have an overall trend that we call ‘inflation’.
First, who said there was no inflation? In 2000, the overall inflation rate was 4.4%; for the second quarter of 2001 prices rose at an (annualized) rate of 3.7%. Slow but steady.
Second, the cost of grain is, in fact, a very small component of the cost of a box of cereal. Most of your money goes to processing, labor, packaging, and transportation. In other words, what you’re buying is a little bit of raw materials, and a whole lot of convenience.
Last, major revisions to the CPI market basket are made rather less often than you think – about once every 10-15 years. The last major revision was in 1998. See
http://stats.bls.gov/cpiupdt.htm
for a Bureau of Labor Statistics press release on future plans to update the market basket.
Also,
http://stats.bls.gov/cpifact5.htm
is an article that explains why changes in the CPI may differ greatly from your experiences as an individual.
The BLS doesn’t publish the raw data that makes up the CPI on their Web site. However, a glance at their FAQ indicates that if you really want price data on apples from 1913, they’ll send it to you.