We are told that the U.S. rate of inflation for the month of December 2011 was a low 2.96%, and that the average for the year of 2011 was 3.16%.
But if your wallet seems a little lighter after a trip to the grocery store or gas station, you’re not imagining things. It’s just that — Surprise! — our government does not include food and energy prices when calculating the rate of inflation.
The inflation rate is calculated based on the Consumer Price Index (CPI-U) compiled by the U.S. Bureau of Labor Statistics (BLS) and is based upon a 1982 Base of 100. A Consumer Price Index of 158 indicates 58% inflation since 1982, the commonly quoted inflation rate of 3% is actually the change in the Consumer Price Index from a year earlier.
To measure the cost of living for consumers and come up with the Consumer Price Index, the Bureau of Labor Statistics prices everything consumers spend money on — haircuts, plane tickets, medical care, clothes, etc.. Then all of the expenditures are categorized and weighted based on the amount that the average consumer spends on those categories. The percentage change from month to month is the rate of inflation, and it’s usually expressed as an annualized number.
But the BLS discards two categories — food and energy — when calculating the core inflation rate because, it is argued, the prices of food and energy are easily affected by the capricious nature of weather and political winds.
That, of course, makes the official inflation rate quite deceptive because the plain truth is that a big chunk of our pay checks actually goes toward food and gas. And, it turns out those prices have skyrocketed under Obama.
- The price for a gallon of regular unleaded gasoline in the city has jumped 83%, from $1.79 in January 2009 to $3.28 by December 2011.
- The price of one pound of 100% ground beef has gone up 24%, from $2.36 in January 2009 to $2.92 by December 2011.
- The price of one pound of sliced bacon has gone up 22%, from $3.73 in January 2009 was $3.73 to $4.55 in December 2011.
- Ice cream prices, for a half-gallon, rose 19.1%, from $4.44 in January 2009 to $5.25 in December 2011.
- Whole wheat bread prices increased 5.02% from $1.97 in January 2009 to $2.07 in December 2011.
- The average retail price of a dozen Grade A eggs increased 1.30%, from $1.85 in January 2009 to $1.87 in December 2011.
- Only the price of whole milk prices slightly declined by 0.28%, from $3.58 in January 2009 to $3.57 in December 2011.
Two groups of Americans are especially affected — the poor and the elderly.
Poor and low-income Americans are most affected by increases in food and gas prices. At the same time, older retired Americans who depend on income generated by interest on their savings have seen their income dwindle to near nothing because of the low interest rates offered by banks and the U.S. Treasury. Those rates, calibrated to what the government claims is the official inflation rate, are at a historic low, barely above 1-2%.
How are we liking the Hope and Change?