{"id":2164,"date":"2016-06-29T11:58:49","date_gmt":"2016-06-29T11:58:49","guid":{"rendered":"http:\/\/nayrb.org\/~blog\/?p=2164"},"modified":"2016-06-29T02:58:58","modified_gmt":"2016-06-29T02:58:58","slug":"how-do-you-measure-inflation","status":"publish","type":"post","link":"http:\/\/nayrb.org\/~blog\/2016\/06\/29\/how-do-you-measure-inflation\/","title":{"rendered":"How do You Measure Inflation?"},"content":{"rendered":"

Inflation is supposed to be one, measurable number. There’s a number that’s quoted in all the newspapers, and is used all over the place, to help determine how well the economy is doing, to index pensions, to negotiate union contracts, etc, etc…<\/p>\n

This is generally known as the ‘CPI’, or ‘Consumer Price Index’. I’ve reproduced the numbers for Canada from Statcan<\/a>[1] below:<\/p>\n

\r\nConsumer Price Index, historical summary\r\n(1996 to 2015)   \tAll-items \tChange from previous year\r\n  \t2002=100 \t%\r\n1996 \t88.9 \t1.5\r\n1997 \t90.4 \t1.7\r\n1998 \t91.3 \t1.0\r\n1999 \t92.9 \t1.8\r\n2000 \t95.4 \t2.7\r\n2001 \t97.8 \t2.5\r\n2002 \t100.0 \t2.2\r\n2003 \t102.8 \t2.8\r\n2004 \t104.7 \t1.8\r\n2005 \t107.0 \t2.2\r\n2006 \t109.1 \t2.0\r\n2007 \t111.5 \t2.2\r\n2008 \t114.1 \t2.3\r\n2009 \t114.4 \t0.3\r\n2010 \t116.5 \t1.8\r\n2011 \t119.9 \t2.9\r\n2012 \t121.7 \t1.5\r\n2013 \t122.8 \t0.9\r\n2014 \t125.2 \t2.0\r\n2015 \t126.6 \t1.1\r\n<\/pre>\n
These numbers should dovetail well with what you read in the news.  They even nicely break the CPI down by type of item<\/a>:<\/p>\n
\r\nConsumer Price Index, by province (monthly)\r\n(Canada)   May 2015 April 2016 \tMay 2016 April 2016 to May 2016 May 2015 to May 2016\r\n  \t2002=100 \t% change\r\nCanada \t  \t \r\nAll-items \t\t126.9 \t128.3 \t128.8 \t0.4 \t1.5\r\nFood \t\t\t140.8 \t143.8 \t143.3 \t-0.3 \t1.8\r\nShelter \t\t133.2 \t134.9 \t135.1 \t0.1 \t1.4\r\nHousehold op & furn. \t119.7 \t121.6 \t122.1 \t0.4 \t2.0\r\nClothing and footwear \t95.0 \t96.0 \t96.0 \t0.0 \t1.1\r\nTransportation \t\t128.0 \t127.8 \t129.4 \t1.3 \t1.1\r\nHealth and pers. care \t120.7 \t122.2 \t122.3 \t0.1 \t1.3\r\nRec, ed, & reading \t109.9 \t110.3 \t111.7 \t1.3 \t1.6\r\nAlc. & tobacco products 151.9 \t156.5 \t156.8 \t0.2 \t3.2\r\nSpecial aggregates\r\nAll items excl. food \t124.2 \t125.3 \t126.1 \t0.6 \t1.5\r\nAll items excl. energy \t124.8 \t126.9 \t127.2 \t0.2 \t1.9\r\nEnergy \t\t\t152.4 \t143.4 \t146.9 \t2.4 \t-3.6\r\nSource: Statistics Canada, CANSIM, table 326-0020 and Catalogue nos. 62-001-X and 62-010-X.\r\nLast modified: 2016-06-17.\r\n<\/pre>\n
But many peoples’ experience of inflation can be very different.<\/p>\n
I’ll use an example near and dear to my heart:<\/p>\n
Today, I had the 
\"Vegetable<\/a>
Vegetable Chow Mein from my favourite food truck: Wokking On Wheels!<\/figcaption><\/figure><\/p>\n
I first visited the Wokking on Wheels food truck sometime during the fall of 1996, when I was working on Calculus with J (Thanks, J!).  At that time, they had five daily specials which, if I recall correctly, they were selling for $3.75.  These included the special Thursday special, ‘Singapore Fried noodles’, which you could persuade them to add red sweet sauce to.  Delicious!<\/p>\n
Anyway, the Vegetable Chow Mein was the least expensive thing on their menu today, at $7.<\/p>\n
So, 20 years later, how has inflation fared?  By the CPI deflator above, you would expect a $3.75 item in 1996 to cost $3.75*128.8\/88.9 = $5.43, about $1.50 less than the actual.<\/p>\n
Even if you use the ‘food’ number above, you get: $3.75*143.3\/88.9 = $6.04, or about $1 less than the actual.<\/p>\n
There are a number of reasons for this (which are beyond the scope), but it’s enough for now to note that there are reasons that people have a different feeling of inflation than what is ‘official’.<\/p>\n
[1]The numbers for Ontario<\/a> seem to be about the same to me.<\/p>\n","protected":false},"excerpt":{"rendered":"
Inflation is supposed to be one, measurable number. There’s a number that’s quoted in all the newspapers, and is used all over the place, to help determine how well the economy is doing, to index pensions, to negotiate union contracts, etc, etc… This is generally known as the ‘CPI’, or ‘Consumer Price Index’. I’ve reproduced … Continue reading How do You Measure Inflation?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[12,25,10,29],"tags":[],"_links":{"self":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/2164"}],"collection":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/comments?post=2164"}],"version-history":[{"count":3,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/2164\/revisions"}],"predecessor-version":[{"id":2168,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/2164\/revisions\/2168"}],"wp:attachment":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/media?parent=2164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/categories?post=2164"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/tags?post=2164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}