News From Terre Haute, Indiana

Business

December 30, 2012

MORTON MARCUS: Consumer Price Index offers guide to life in year ahead

The latest monthly Consumer Price Index offers a guide to life in the year ahead. Of course, as they say on Wall Street, past performance is not a guarantee of future conditions. Use caution in adjusting your life to the materials that follow.

Between November 2011 and 2012, the Consumer Price Index rose by 1.8 percent. That does not mean your cost of living went up by that amount. Your tastes, preferences and habits determine what happened to your cost of living. If small increases in prices will get you to change the amounts you purchase, your cost of living may have declined.

Let’s consider some examples:

Medical care prices increased by 3.4 percent. If you did not use medical services, drugs, and equipment during the past year, your cost of living increase was probably less than average. How will those two thing be next year — both your usage and the price changes of medical care?

In the past year the prices of food consumed at home rose by 1.3 percent, half as fast as food consumers ate outside the home. Again, what you had in your particular market basket differs from the “average consumer” such that your personal inflation rate could be much different.

Do you start your day with a breakfast cereal? Those prices rose by a mere 0.6 percent during the past year. The fresh whole milk you’ll have with that cereal went up by 2.6 percent. Balance that combo against the increase of 1.6 percent in the price of eggs and a robust 5.8 percent decline in coffee prices. Maybe protein and caffeine would be your choice.

Lunch? Frankfurters climbed only 1 percent in price, but hamburger meat rose 6.7 percent. In either case you’ll want to consider some cheese with that since those prices fell 1.1 percent. Want a soft drink and a sweet with that?

Carbonated beverage prices decreased by 0.5 percent while cookies rose by 3.5 percent.

If you choose to alter your consumption according to last year’s price changes, then you will want to rethink where you do your drinking. Alcohol beverages consumed at home saw prices rise just 0.7 percent, but those consumed in commercial establishments were up by 3.1 percent.

Beer at home went up in price by 1.5 percent. Wine for home consumption rose by a trifling 0.1 percent. But the distilled alcohol (your favorite booze) declined by 0.3 percent. If you follow the prices, you’ll give more attention to the hard stuff.

While treated lightly here, the Consumer Price Index is serious business that determines the changes in Social Security payments, the wages of millions of workers, and the rental of property. How that Index is constructed and used is of critical importance to the economy.

Once the problems of the fiscal cliff are resolved, the methodology behind the CPI may be the focal point of disputes in Congress.

Morton Marcus is an independent economist, writer and speaker.

1
Text Only | Photo Reprints
Business
Latest News
TribStar.com Poll
AP Video
Obama Hopeful on Ukraine, Will Watch Russians Crew Criticized Over Handling of Ferry Disaster Flamingo Frenzy Ahead of Zoo Construction Agreement Reached to Calm Ukraine Tensions Malaysia Plane: Ocean Floor Images 'Very Clear' Raw: Bulgarian Monastery Dyes 5000 Easter Eggs Diplomats Reach Deal to Ease Tensions in Ukraine Raw: Pope Francis Performs Pre-easter Ritual Captain of Sunken South Korean Ferry Apologizes Chelsea Clinton Is Pregnant Raw: Two Lucky Kids Get Ride in Popemobile Sparks Fly With Derulo and Jordin on New Album New York Auto Show Highlights Latest in Car Tech Passengers Abuzz After Plane Hits Swarm of Bees Raw: Royal Couple Visits Australia Mountains Raw: Pro-Russian Militants Killed on Base Beau Biden Plans 2016 Run for Del. Governor Calif. Investigators Re-construct Fatal Bus Cras U.S. Sending Nonlethal Aid to Ukraine Military Raw: Blast at Tennessee Ammunition Plant Kills 1
NDN Video
The 2014 New York Auto Show Meet Johnny Manziel's New Girlfriend Chelsea Clinton Announces Pregnancy Funny: Celebrating Easter with Martha Stewart and Friends Man Accuses 'X-Men' Director Bryan Singer of Sexually Abusing Him As a Teenager Man hit with $525 federal fine after he doesn't pay for soda refill Lea Michele & Naya Rivera Feuding? Jabari Parker declares for the NBA draft Singing Nun Belts Out Cyndi Lauper New West, Texas Explosion Video Swim Daily, Throwback Thursday Don't Be A Tattletale: Bad Bullying Tips For Students The trillest thoughts on marijuana "RHOA" Star Charged With Battery Grizzly Bears Get Snowy Birthday Party Weatherman draws forecast when another technical glitch strikes WGN Elizabeth Olsen's Sexy Shoot Bay Area Teen Gets Prom Date With Help From 'Breaking Bad' Star Boston Bomb Scare Defendant Appears in Court Behind The Tanlines Jersey Strong Part 1
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
  • -

     

    March 12, 2010

activity