Whip Inflation Now
Whip inflation now - Gerald Ford
The Bureau of Labor Statistics (BLS) keeps track of the average retail price for a number of common items as a U.S. city average. Let’s take a look at a few. We used the price for the month President Obmam was inaugurated, January 2009, and the last month of data available, December 2011. The items are sorted in descending order by the percentage increase of the price during the Obama administration.
| Obama | Obama | ||||
| Item | Unit | Jan 2009 | Dec 2011 | I/D | Perc |
| Gasoline, unl reg | gal | $1.787 | $3.278 | $1.491 | 83.44% |
| Fuel oil, #2 | gal | $2.509 | $3.777 | $1.268 | 50.54% |
| Ground beef | lb | $2.357 | $2.921 | $0.564 | 23.93% |
| Sugar, white | lb | $0.569 | $0.703 | $0.134 | 23.55% |
| Bacon. Sliced | lb | $3.730 | $4.550 | $0.820 | 21.98% |
| Cookies, Choc chip | lb | $3.114 | $3.682 | $0.568 | 18.24% |
| Spaghetti & macaroni | lb | $1.131 | $1.306 | $0.175 | 15.47% |
| Eggs, A lrg | doz | $1.850 | $1.874 | $0.024 | 1.30% |
| Electricity | kwh | $0.126 | $0.127 | $0.001 | 0.79% |
| Lettuce, iceberg | lb | $0.944 | $0.947 | $0.003 | 0.32% |
| Milk, whole | gal | $3.575 | $3.565 | -$0.010 | -0.28% |
| Potatoes, white | lb | $0.676 | $0.666 | -$0.010 | -1.48% |
Graph of BLS data on average gasoline prices from January 2001 to December 2011
Graph of BLS data on average fuel oil prices from January 2001 to December 2011
Now, we are told repeatedly that inflation is low. We looked at the Consumer Price Index data at the BLS.
The increase for all items works out to be 6.9 percent for the period.
BLS graph of the Consumer Price Index CPI-U for 2009 to 2011. 1984 is base of 100.
The increase for food prices during the period works out to be 4.7 percent.
BLS graph of the CPI-U for food from 2009 to 2011
Something just doesn’t seem right here. How can the CPI show so little increase when compared to some individual items?
Really? OK, so we went to the BLS page with the item data, copied it to a spreadsheet, and deleted unnecessary columns. Here is the BLS list of price changes from December 2010 to December 2011, sorted by percentage change. Two pages of items with price increases year over year and about a half page of price decreases. Take a look and use the comments to comment.
the attachments to this post:
Calc 100 for 2009 to 2011
CPI Food 2009-2011
CPI 2009-2011
fuel oil 2001-2011
gasoline 2001-2011
Don’t the CPI numbers include home prices, which are way down, which easily explains the apparent discrepancy? Aren’t we still fighting deflation in housing, and the side effect is inflation in everything else?
I believe food and energy are not included in the “core inflation” rate. There’s a reason for this (namely that the price both is very volatile) but in today’s economy they should both be included in some way.
One possible reason for the discrepancy is that your charts and data go from the beginning of 2009 to the end of 2011. The CPI calculator probably compares beginning-to-beginning — i.e., it covers a time period almost a year shorter, and prior to the big rises of 2011.
How come you do not have corn listed. I know the cost of my feed corn has gone up from about $10 / per hundred to over $20
The price of feed corn is directly driven by its use to produce ethanol as an additive for gasoline. Feed corn prices Corn prices from December 2009 to December 2011 increased by about 60 percent.
Well, looking at the price decreases, I would guess that the BLS calculation is full of bologna (down 11.3%).
[...] CHUCK SIMMINS: Whip Inflation Now! [...]
There isn’t really any justification for the official numbers.
I don’t see how they arrive at them.
I’ve heard they assume that, as one item increases in price, they swap it out for a substitute item that hasn’t increased in price, so that the CPI only increases for an item in the “basket” if all possible substitutes have increased.
Also, I’ve heard that official inflation estimates are particularly misleading with respect to technology, in that as a piece of tech gets older, its price drops dramatically, and that this is used to offset the increase in prices of other items in the basket. The logic is apparently that you can get a 486 computer with 2MB of RAM pretty cheaply these days, so it shouldn’t matter much if your milk and gas have doubled in price. (This, I’m sure, is a gross exaggeration, but that’s the idea.) If what I’ve heard on this topic has any accuracy at all, then, well, it’s a clear opportunity for “shenanigans.”