Planet Money

Why Your Salary May Be Affected By The Price Of Lettuce

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There's a good chance that the size of your annual raise is determined partly by theĀ consumer price index, the key measure of U.S. inflation.

Also affected by CPI: Social Security payments, food stamps and school lunch programs, among other things.

All of which raises a question. How does the government come up with the CPI?

It starts with hundreds of government workers like George Minichiello, who are constantly recording the prices of tens of thousands of goods.

George's job is to go from store to store to answer one basic question: How much does stuff cost? Fish sticks, dental fillings, Caribbean cruises — George wants to know how much they cost today.

His shopping list is prepared by his bosses at the Bureau of Labor Statistics, and it represents the purchases made by a typical U.S. household. The list is called the "market basket," and the items in it are very specific.

Today, for example, George is looking for a very particular kind of lettuce at a small supermarket in Brooklyn.

"A multi-pack of romaine lettuce, not certified organic, from California," he says.

This particular package of lettuce costs $2.99 — 27 percent cheaper, pound for pound, than the same lettuce was the last time he checked.

Food prices are notoriously volatile; they swing up and down all the time. That's why most experts focus on "core CPI," which strips out the prices of food and energy and shows a more consistent path over time.

George drives to another store to check the next item on his list: a boy's shirt.

"I'm looking for the fabric content: 97 percent cotton and 3 percent Lastol. It's a long sleeved shirt; it's a full-button front."

George has to be so specific because he needs to make sure the items he prices this month are exactly the same as the items he priced last month. That's the only way to tell whether prices are going up or down.

The price of the shirt — along with the lettuce, canned sardines and multi-grain bread — will be part of the next CPI release, which comes out on Wednesday.



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