Why do the “official” numbers on food inflation state it’s gone up by tiny amounts like 8%, 19%, 11%, etc. but most of the foods I see has gone up by a minimum of 50%, 100%, 80%?

Question

Why do the “official” numbers on food inflation state it’s gone up by tiny amounts like 8%, 19%, 11%, etc. but most of the foods I see has gone up by a minimum of 50%, 100%, 80%?

In: Economics

Answer 1

now that many people have explained the mechanics of inflation, have a look at the BLS’ CPI graphs:

[12-month percentage change, Consumer Price Index, selected categories (bls.gov)](https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm)

you seem most concerned with the “food at home” basket. You might be incredulous that the 12-month average of inflation has gone down to 1.2% for this category as of March. But there are a few things to realize:

* There was a huge amount of food inflation last year, so, it’s hard to be objective. You need real price histories of a real assortment of food items from the grocery. Yes the prices are very high, but how much of that price growth happened recently?
* “Inflation went down” doesn’t mean prices went down, it means the rate of change slowed. Prices are still going up, less quickly. This is probably the number 1 misunderstanding about what these graphs mean among consumers. Prices don’t go down because the trace went down. Prices only go down if the trace’s value sits below zero for a period of time.
* You will notice that “food away from home” kind of lags “food at home”. That’s because a large percentage of restaurant food is procured with long term contracts; also, cost of labor influences that category more. Supermarket retail prices track changes to wholesale a lot more quickly.