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7: The Friday Podcast: The Price Of Lettuce In Brooklyn
CPI
or the consumer price index is the measure of the average change over time in
the prices paid by consumers for a market basket of goods and services. The CPI measures the inflation in the country,
and it influences everything from Social Security to the price of school
lunches and what your raise is going to be next year. CPI is such a critical number to this
country’s economy that people actually go out and price items from year to year
to determine this number. That is what
this podcast was all about, figuring out the CPI of items that we consider
necessities.
The
Bureau of Labor Statistics, or the branch of the Federal Government that is
responsible for finding facts regarding the economy, measures the CPI. In this podcast, NPR tells the journey of George
Minichiello, who goes to stores in Brooklyn in search of the CPI. George is described as someone who is very
focused on his work, and is not focused on the materialistic things such as a
fancy car or publicizing his career with a BLS jacket. George has been going to this one grocery
store every month for the past three years in order to measure the CPI. They say that the storeowners know who he is
and know what he is there for, and is very welcoming to him. When they get to the store, George announces
that they are in search for the price of Romaine Hearts of Lettuce. He sees that the price is $2.99, which is the
same price that it was the month before, but the weight of the bag was
different. This means that there was a
price decrease, but to be exact that means there was a 27% price decrease
deflation. This seems pretty large but
it is normal depending on the weather and what produce is being grown.
In
order to figure out what the CPI is, you have to divide overall CPI into two
groups: headline CPI and Core CPI. Core CPI is when you cut out food, oil, and
other products that fluctuate regularly.
During this trip, George examined food and clothes, both of which are
core CPI. The second item that George
examined was a young boy’s size-14 collared shirt that was made of 97%
cotton. What he came to discover was
that this price remained the same as the previous month at $25. Although it remained the same, this number is
constantly watched in order to see whether the economy is headed toward an
inflation or deflation.
CPI
is a critical number for the US economy.
It determines if our country is doing well or if it is doing poorly, or
if we are experiencing deflation or inflation.
The BLS has the important job of going out and actually measuring this
number. This podcast explained the
importance behind the CPI and the duties of the BLS.
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