Wednesday, November 16, 2005

"Core" Inflation

The reports on "core" inflation bear a caveat: the number excludes the costs of transportation, housing, and food. Remember that when you go to the grocery store, driving from your home.

And in another interesting little note, the Fed has decided NOT to issue reports on "M3" anymore, which has been growing at about 10%/year--triple the amount of reported "inflation." They tell us that it's simply too difficult to pinpoint the actual number.

Finally, in a reliable report from the Front Lines: people are noticing that grocery prices are up, and up considerably, in the last few months. And they are complaining about it.

A few years ago (the mid-1980's) it was easy to tell how much my longsuffering and wonderful wife spent at the grocery store: simply multiply the number of minutes in the store by $1.00. An hour's shopping was a $60.00 grocery bill.

(I am NOT making this up. Nor am I making it up when I tell you that in the mid-1950's, through about the late 1960's, a US-made automobile cost about $1.00/pound curb weight.)

Anyway, I ran the numbers on groceries. We're now up to $1.50/minute in the store. Granted, more of the purchases are frozen and/or freeze-dried for convenience. And 20 years is a long time. Kinda wish I had kept track of the per-minute price on an annual basis...

2 comments:

M.Z. Forrest said...

Barrons has been very critical of the inflation numbers coming out. From what I understand, many of the large financial houses do their own inflation calculation or at least fudge the government's number up 1.2% points or so.

I love the reason we don't include food. If beef goes up in price, people will just buy more chicken. Therefore, food prices haven't gone up. Makes sense to me too.

mad said...

I get a kick out of your dollars-per-minute of shopping. I always used to figure about $20.00 per paper sack of groceries.
Now I'm lucky if I can get a single bag for less than $30.00.