It’s the return of a monoblogue tradition, but with a slightly new twist.
I was inspired by a recent report regarding New York Federal Reserve President William Dudley and comments he made about the rate of inflation. Inflation, he said, is measured by a number of factors but doesn’t include food and energy costs. When an observer asked about this, Dudley reminded the questioner that the price of an iPad 2 is the same as the iPad 1 when it came out – “you have to look at the prices of all things.”
Retorted the questioner, “I can’t eat an iPad.” And it seems to me that a lot of food and energy prices have surged over the last two years. Fortunately, I had done my ‘market basket’ series from 2006 to 2009 so I had a handy reference guide to see just how prices have progressed. Instead of its original purpose, which was to track Walmart’s prices in the wake of the ill-fated ‘Fair Share’ Act Maryland passed in 2005, I used these comparisons as a general consumer guide to local grocery prices.
In the wake of Dudley’s remarks I decided to see just how rampant inflation was, since I got the same perception from my frequent grocery shopping trips. But instead of comparing all four local stores I opted to just compare Walmart year-over-year. Here‘s what I found.
Overall, I was surprised that inflation among all items was just over 4 percent, particularly with that 75% surge in gasoline costs. But a lot of the key elements bringing down the rate aren’t necessarily grocery staples – the surge in chicken prices more than counteracts the drop in beef prices. Bread may be a little cheaper but milk has gone up quite a bit. Among the few declining items are non-grocery items like detergent and soda pop, which not all shoppers need every week.
And it’s gotten quite a bit more expensive to get to the grocery store with that huge spike in gasoline prices. I didn’t begin tracking them until 2008 but we’re closing in on the $3.419 that my April, 2008 survey found, with prices usually not peaking until around Memorial Day. $4 a gallon isn’t outside the realm of possibility, particularly for those who drive trucks and need diesel fuel. They’re generally the people who deliver groceries to the stores.
So it’s not your imagination, when 12 of the 20 items sampled have gone up in price. That’s 60% of the items surveyed.
And, finally, if you live in the city of Salisbury and haven’t voted yet – what are you waiting for? There’s quality candidates who need your support (and lesser ones who need to be told to hit the bricks!)
You make a good point about substitution making an accurate measure of price increases difficult. This is why most economists say that the COLAs that most government workers get actually amount to small (additional) raises each year, as the government basket of goods changes much slower than people’s purchases. A price-conscious shopper will opt for chicken one week and beef the next if prices fluctuate, leaving their actual expenditures fairly flat.
It would seem to me that the best way to get accurate measures of this would be to take average prices of all items sold in particular categories. For example: don’t just use one brand of milk but average the price of all brands. And don’t just take readings annually but take them each week to factor in sales. Then we could get very accurate trendlines for everything.
I realize this sounds difficult and onerous, but grocery stores already must track prices. All one would have to do is write a program to take readings of different items and automatically use the info to populate a spreadsheet. This is a job that would be well within the scope of a good economist and programmer.