Recently economist Bruce Yandle wrote, “Inflation doubled from 1.1% in the fourth quarter to 2.2% in the first quarter, but that’s when they take out food and energy prices. For real people, inflation is 3.8% (including food and energy prices).” (We can appease the Austrians by distinguishing price inflation from monetary inflation.)
But I wonder if even that figure is wildly understated for at least some consumers. Consider some examples from my local grocery store:
* I noticed that the same package of sausage dropped in size from 16 to 14 ounces, a 14 percent price increase.
* Milk has gone from $1.99 per gallon to $2.69, a 35 percent increase. June 1 Update: I notice that milk is now on sale for $2.29, so a 15 percent increase.
* Whereas a package of cream cheese used to go on sale for $1 per package, the new sale price is $1.25, a 25 percent increase.
* I’ve been able to find fewer good markdown deals lately, which I take to be a combination of more people looking for them and grocers fighting tighter margins. A non-markdown item easily can cost double.
The wealthy, who already spend a ton of money on food, easily can reduce their spending with marginal shopping changes. But I suspect that, for lower-income shoppers, the real pain of inflation is considerably higher than the official figures indicate. These are also the people probably last in line for wage hikes or even getting hired.
And, according to one source, the April rate is 3.16 percent.