{"id":281,"date":"2014-02-13T08:00:28","date_gmt":"2014-02-13T08:00:28","guid":{"rendered":"http:\/\/blogs.pugetsound.edu\/econ\/?p=281"},"modified":"2014-02-12T06:24:00","modified_gmt":"2014-02-12T06:24:00","slug":"bls-and-cpi-measuring-inflation-2","status":"publish","type":"post","link":"https:\/\/blogs.pugetsound.edu\/econ\/2014\/02\/13\/bls-and-cpi-measuring-inflation-2\/","title":{"rendered":"BLS and CPI: Measuring Inflation"},"content":{"rendered":"

For the unfamiliar, I\u2019ll open with a quick and rudimentary explanation of the term inflation. Economists define it as a measure of changes in the purchasing power of a dollar. Inflation occurs when prices for goods and services increase across the board; almost everything\u2014from hotdogs at baseball games to boxes of pencils\u2014becomes more expensive. Many complex factors interact to affect inflation, but this post will focus on quantifying it, a tricky matter itself. The Bureau of Labor and Statistics (BLS)\u2014a federal agency\u2014works hard to estimate it with their Consumer Price Index (CPI). Their approach centers on a shopping basket, or a hypothetical one at least. They fill it up with \u201cgoods and services people buy for day-to-day living\u201d in order to sample retail prices. Deciding what to put in the basket in the first place requires careful consideration; they have to put together a shopping cart that accurately represents the composition of consumer spending across the United States. And the BLS doesn\u2019t just pull the data off a magical spreadsheet. They sample prices from 87 urban areas, obtaining most data \u201cby personal visits or telephone calls of the Bureau\u2019s trained representatives.\u201d So if you foster burning passions for economics, statistics, and shopping (or at least pretending to shop), you might want to apply for a BLS job. They compare the total cost of the sampled goods and services to shopping baskets of years past to gauge price changes. Mid-January they released a\u00a0Consumer Price Index report<\/a>, finding that prices rose just 1.5 percent over 2013.<\/p>\n

Planet Money blogger Julia Zhu wrote\u00a0an article examining price trends<\/a>\u00a0for individual components of that shopping basket. Each good had unique price changes throughout the year. Zhu pointed out that gas prices fell by one percent last year, the price of bacon rose 9.6 percent. She goes on to discus some factors behind individual price swings such as the rising popularity of bacon and increased domestic production of oil. Changes in individual prices don\u2019t necessarily reflect inflation; other factors can be at play. Her analysis highlights the individual factors that the BLS tries to iron out of its inflation estimate by including hundreds of goods in its cart.<\/p>\n

One commodity that might be of particular interest to student readers: college textbooks. Zhu noted that they rose in price by 5.7 percent. So the next time you complain about the money you sank into books at the beginning of the semester, add something new to that hackneyed conversation. Be sure to point out that book costs are rising significantly above the rate of inflation. You can rest assured that it\u2019s probably not just your imagination; thanks to the hardworking economists and statisticians at BLS you can confidently assert that overall they are becoming more expensive in comparison to other goods.<\/p>\n","protected":false},"excerpt":{"rendered":"

For the unfamiliar, I\u2019ll open with a quick and rudimentary explanation of the term inflation. Economists define it as a measure of changes in the purchasing power of a dollar. Inflation occurs when prices for goods and services increase across the board; almost everything\u2014from hotdogs at baseball games to boxes of pencils\u2014becomes more expensive. Many complex factors interact to affect inflation, but this post will focus on quantifying it, a tricky matter itself. The Bureau of Labor and Statistics (BLS)\u2014a federal agency\u2014works hard to estimate it with their Consumer Price Index (CPI). Their approach centers on a shopping basket, or Continue reading BLS and CPI: Measuring Inflation<\/span>→<\/span><\/a><\/p>\n","protected":false},"author":388,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-281","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/users\/388"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/comments?post=281"}],"version-history":[{"count":3,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/281\/revisions"}],"predecessor-version":[{"id":289,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/281\/revisions\/289"}],"wp:attachment":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/media?parent=281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/categories?post=281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/tags?post=281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}