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Inflation (statistics) remain contained
Friday, June 13, 2008
Consumer prices soared in May, but inflation remained well contained within the Bureau of Labor Statistics Consumer Price Index (CPI). The Labor Department reported prices rose 0.6 percent in May, paced by a 4.4 percent increase in energy but, on a year-over-year basis, inflation measured just 4.2 percent.
Aside from the euro-area, the U.S. has one of the lowest inflation rates in the world (see The Economist for a handy comparison of inflation rates around the globe).
Of course hedonic adjustments, geometric weighting, and other factors help to keep inflation in the U.S. low also.
What's that? Food prices have risen only five percent over the last year?
Yes, that's right, according to the BLS data.
Does that sound like anyone's experience in the real world?
Here's a cropped version of the most recent BLS data showing the percent change in food prices as of May from last month and last year.
Boy, as nation, we sure eat out a lot - the CPI is weighted almost equally between "Food at home"(up 5.8% yoy) and "Food away from home" (up 4.3% yoy).
By the way, in case you haven't figured it out, this is the way the Labor Department figures Americans spend their food money - almost 15 percent of their overall spending, split almost equally between dining in and dining out.
Is anyone else surprised that we spend more money on fruits and vegetables (1.2% of the overall total) than on cereal and bakery (1.0%)?
4 comments:
Eating out (I don't know who does) helps inflation because the price doesn't go up, they just offer cheaper, smaller cuts. Don't forget how falling home prices is probably holding down the numbers as well.
It's laughable how low these statistics are compared to everywhere else in the world. The fact that the CPI is not consistent with reality is finally going mainstream.
2.6 % for meat, poultry, fish. Yes that jives with what I'm seeing at my local grocery store. I can go in and find rib-eye & new york strip on sale for very reasonable prices. But when I go to buy a jug of cooking oil, or a damn lemon, or a gallon of milk I encounter serious sticker shock. A lemon for $1.19 each? Comeon!
I agree, meat prices will soon catch up in terms of inflation. That corn fed beef will have to pass on price increases for corn at some point.
My wife and I have started to shop for most of our items at the local grocery stores with the cheapest prices. Not necessarily the big name stores like vons, etc.
Did anyone notice the second to lowest spot for alcoholic beverages? Good thing I can still buy that bottle of Jack to wash away my sorrows.
Meat prices are temporarily lower because since corn used for feed is so expensive they're sending cattle straight to slaughter rather than feed them to fatten them up, which would cost so much now it's not profitable. This is causing a temporary glut of meat on the market. Once that's out of the pipeline, prices will go up.
I guess frozen steaks would be a good investment now.
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