The Way The Government Measures Inflation Is More Hands-On Than You Probably Expect
MARY LOUISE KELLY, HOST:
Inflation is a huge concern in the economy right now. This week, the Consumer Price Index showed prices were up 5.4%. That's compared to a year ago. But how exactly does the government track this number? Stacey Vanek Smith and Darian Woods of The Indicator From Planet Money got a peek behind the curtain.
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DARIAN WOODS: To get the inflation number every month, millions of data points are involved, gathered by around 450 dedicated workers.
EMILY MASCITIS: Hi, my name is Emily Mascitis. And I am an economist with the United States Department of Labor, Bureau of Labor Statistics.
STACEY VANEK SMITH: Every month, Emily and her colleagues go on a hunt - a hunt for inflation. To do this, they track the price of, well, just about everything - rent, haircuts, trucks, weddings, funerals, yoga pants.
MASCITIS: And my favorite saying is we follow prices on pretty much everything that is legal in the country (laughter).
WOODS: And it starts with surveys taken by thousands of households - just everyday people all across the country who write down in really minute detail how they spend their money
VANEK SMITH: And then inflation watchers like Emily will find, you know, a particular brand of butter at a particular store, and they will track the price of it for years.
MASCITIS: We have a 600-page manual for a reason (laughter).
VANEK SMITH: Really? It's 600 pages? Have you read it?
MASCITIS: I have (laughter).
VANEK SMITH: To check these prices, trackers like Emily used to drive around to stores and then come back to that store to look at that same item month after month, which sounds really kind of old-school and needlessly labor intensive. But this data is just that important.
WOODS: Of course, COVID changed everything. So now, Emily's day is a lot of this.
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MASCITIS: This is Emily Mascitis calling with the Bureau of Labor Statistics. So we are just doing the Consumer Price Index update on our pair of socks.
VANEK SMITH: Socks - of course, they are not just any white athletic socks, though.
UNIDENTIFIED PERSON #1: Yeah.
MASCITIS: Just verifying some specifics on the item - it's knee-length. Is that correct?
UNIDENTIFIED PERSON #1: Yes.
WOODS: Emily makes a note of all of this. And now, the moment is here - the price.
UNIDENTIFIED PERSON #1: They're 7.99.
WOODS: Turns out, the price hasn't changed since last month.
VANEK SMITH: But that is just one store. And you cannot measure inflation using just one pair of socks. And Emily has at least 30 more price checks ahead of her today, including to a little corner store in Philadelphia to check the price of butter.
UNIDENTIFIED PERSON #2: Four thirty-five.
MASCITIS: Four thirty-five?
UNIDENTIFIED PERSON #2: Yes, ma'am.
MASCITIS: OK, so that's gone up 25%. Do you happen to know why it's increased so much?
WOODS: But Emily's been doing this for years, and her Spidey sense is going off. So before she fills out that special form, she asked the store owner to double-check the price of that butter.
MASCITIS: OK, so it's not 4.35 right now?
UNIDENTIFIED PERSON #2: No, it's two per box.
VANEK SMITH: So it turns out he was looking at the wrong brand of butter. And in fact, the particular butter Emily's been tracking is less than it cost last month.
MASCITIS: OK. I was going to say, like, that's a huge increase for butter, huh? Guess you stock up on it (laughter). I'm glad you took the time to look that up for me. That - I appreciate it.
VANEK SMITH: This is why it's so important to be so precise. That 5.4% inflation rate that pushed markets down, that has policymakers issuing statements and the price of gold rising? That number comes down to this - a woman calling a supermarket in Philadelphia to check the price of butter and then double-checking to make sure the data is right.
WOODS: Darian Woods.
VANEK SMITH: Stacey Vanek Smith, NPR News.
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