Consumer Price Index

If you haven't noticed rising prices at the supermarket lately, you haven't been paying close attention to your spending. Food prices are soaring. Over the past year, prices for some basic grocery staples are rising faster than at any time over the past decade, according to July figures of the Consumer Price Index. Across America, frozen orange juice prices are up 31 percent over a year earlier; eggs and whole wheat bread up 24 percent; milk up 21 percent; sticks of margarine up 17 percent; coffee and chicken breasts up 12 percent; ground chuck up 11 percent; and soft-drink colas up 10 percent.

IT HAS been seven years since inflation exceeded 3 percent and 18 years since it reached double-digit levels.Inflation has lost its capacity to scare Americans. Time has wiped from memory those dreadful years from roughly 1966 to 1990, when inflation wiped out the wage gains of an entire generation, traumatized the nation's politics and brought down foreign governments with alarming frequency.Wall Street, where memories can be notoriously short, hasn't taken inflation seriously for years.

WASHINGTON -- A panel appointed by Congress is expected to recommend this week that the government create a price gauge that would more accurately reflect inflation -- a move that would result in less-generous increases in Social Security payments and other benefits but would also help lower the deficit, officials said.One high-ranking official with knowledge of the panel's report said Friday that the proposed index would better reflect what consumers buy each year.It would largely, perhaps entirely, supplant the Consumer Price Index as the gauge used to calculate cost-of-living increases and adjust segments of the tax system for the effects of higher prices, the official said.

While prices rose 0.3 percent across the country last month, they have fallen recently in metro Baltimore, according to the Department of Labor. The Consumer Price Index for the region fell 0.2 percent in August and September.At least one analyst thinks a falling Baltimore CPI reflects a tepid regional business climate."My reading of it is, the economy is quite soft," said Charles McMillion, chief economist for MBG Information Services in Washington.Government officials, however, said short-term dips sometimes are caused by seasonal fluctuations.

The consumer price index in the Baltimore metropolitan area declined in October and November, and rose only 1.7 percent during the past 12 months, according to figures released yesterday.The 0.5 percent decline in the last two months was driven by a drop in the price of electricity, which economists and officials of Baltimore Gas & Electric Co. said was a normal seasonal adjustment. Lower food prices were another big contributor to the decline.The yearlong inflation picture was aided by a much smaller rate of increase in medical expenses, the figures showed.

WASHINGTON -- A variety of fresh government statistics released yesterday showed that an economic slowdown, becoming more pronounced by the day, is helping to moderate the sting of inflation.Retail prices climbed three-tenths of 1 percent for the second consecutive month in February, the Labor Department reported, result that analysts considered in line with expectations that the inflation rate this year will be held to less than 3.5 percent.Prices are rising, "but very glacially," said Brian J. Fabbri, chief economist for Paribas Capital Markets in New York.

The release dates of several economic indicators were incorrectly reported in Monday's Business section. Figures for the Consumer Price Index will be released June 14; those for factory use, industrial production and business inventories, June 15; and those for housing starts, June 16.The Sun regrets the errors.

WE Americans are so used to being ripped off by our government that it comes as a surprise to learn that some of us unwittingly have been ripping off the government ourselves.Here's the scoop: It seems as though Uncle Sam hasn't been too accurate in computing the consumer price index, the fabled CPI that is used to determine certain financial interest rates, the annual increase in Social Security payments, wages in many labor contracts, office building leases and even some alimony payments.

WASHINGTON -- In what he admitted was a highly cautious forecast, Federal Reserve Chairman Alan Greenspan said yesterday that he had detected signs the recession would end "reasonably soon," although he emphasized that the economy is continuing to shrink.Delivering the Fed's semiannual report to Congress, Mr. Greenspan came under pressure from members of the Senate Banking Committee to continue the central bank's policy of aggressively lowering interest rates to revive the economy.But Mr. Greenspan refused to tip his hand, conceding at one point that he was being "purposefully slightly evasive."

Uncertainty is the watchword this week, as the Middle East and the lackluster state of the economy dominate the attention of those who buy and sell the nation's assets. With those anxieties in the forefront, inflation has taken a back seat. But Wednesday marks the day the nation learns the pace of consumer inflation for December, as well as the full-year rate for 1990. It is likely to have been the worst year for price runups since 1981, when inflation was 8.9 percent. Most analysts are expecting the price rise for 1990 to be somewhere around 6 percent, even if the December figure shows a small drop.

While prices might still seem painfully high in the supermarket aisles, long-suffering consumers are beginning to see a break in their grocery bills - a bit of good news amid the economic gloom. Falling raw-material costs coupled with a feeble economy have curbed soaring food inflation in recent months. Food prices fell on a month-to-month basis in February for the first time since April 2006. Last year, food and beverage prices as calculated by the Bureau of Labor Statistics rose 5.4 percent, the largest annual jump since 1990, because of a big run-up in commodity and energy costs.

Economists worry about deflation - a persistent, broad decline in consumer prices that sometimes accompanies severe recessions. Deflation can lead to lower wages and other income, which makes it difficult to handle debt. Deflation can also accelerate a recession because consumers postpone buying, knowing prices will be lower next month. But fear not. A trip through the statistics shows that some costs continued to rise in December even as the overall consumer price index plunged. A few industries are still minting money.

For more than a year, food manufacturers have been shaving package sizes and raising prices, declaring that they had little choice because of unprecedented increases in the cost of raw ingredients like corn, soybeans and wheat. Now, with the price of grains and other commodities plunging, it may seem logical that grocery prices will follow. But while some grocery items like milk and fresh produce are dropping, the prices of most packaged items and meat are holding firm or increasing. Experts warn that consumers should not expect lower prices any time soon on most items at the grocery store or in restaurants.

When prices fall for clothes, gasoline and other goods and services, it's good news for consumers who are facing increasing financial pressure in an ailing economy. Consumer prices fell by 1 percent last month compared with September, mostly because of plunging energy prices, according to federal data released yesterday. It was the largest single-month drop in the 61-year history of the consumer price index, highlighting the cost cuts that retailers and others are making in hopes of calming jittery shoppers.

A reader asks: Could you explain what is bad about deflation? I understand why inflation is bad, and I presume that deflation is the opposite of inflation. If so, why is it bad if my money is increasing in value rather than decreasing? The short answer is that deflation, like inflation, can kill demand and productive economic growth. Deflation is a persistent and broad decrease in prices. It arrives when there is too much supply, especially of capital goods, and too little demand. (The real estate market, with 11 months' supply of empty homes trying to get sold, is the primo example.

Fill up your gas tank or buy a gallon of milk, and you can't help but think that the inflation rate that comes out each month doesn't reflect the pounding your wallet is taking. That's Lois' complaint. The Baltimore County retiree's pension and Social Security benefits are pegged to the Consumer Price Index. This year, for instance, her Social Security benefits will go up 2.3 percent. Yet the price of one of her prescription drugs has shot up 50 percent in the past five months. "Every time I buy milk, it's gone up. Bread is almost $3 for a loaf.

The stock market didn't offer impressive returns in 2007. But one area of the economy had a comparatively banner year: milk. Yes, the price of milk and other goods, such as eggs or a tank of gasoline, grew at a rate that would make stock investors faint with joy. From the start of the year through November, fresh milk prices rose 23.2 percent, according to the latest data from the Bureau of Labor Statistics. Meanwhile, the S&P 500 returned 3.5 percent for the year; the Dow Jones industrial average did a bit better at 6.4 percent.

If you haven't noticed rising prices at the supermarket lately, you haven't been paying close attention to your spending. Food prices are soaring. Over the past year, prices for some basic grocery staples are rising faster than at any time over the past decade, according to July figures of the Consumer Price Index. Across America, frozen orange juice prices are up 31 percent over a year earlier; eggs and whole wheat bread up 24 percent; milk up 21 percent; sticks of margarine up 17 percent; coffee and chicken breasts up 12 percent; ground chuck up 11 percent; and soft-drink colas up 10 percent.

Rising gasoline prices have been getting all the attention, but the cost of another, more-important staple is actually rising more: food. In the past year, food prices have risen 3.7 percent and are on track to increase as much as 7 percent by year's end. The current increase is more than double the 1.8 percent increase last year, according to the Consumer Price Index. Meanwhile, gasoline prices rose 2.9 percent, with only the cost of health care rising more, and then just slightly. While companies up and down the food chain see the increases, they're only beginning to pass them on to consumers.

Health insurance premiums for my wife, Georgina, and me went up almost 30 percent in 2006. For this year, they've already gone up 13 percent. For our homeowner's insurance plus windstorm coverage, the rise in premiums was 9 percent in 2006. Auto insurance went up 14 percent. (All these increases are without ever making a claim.) On more frequently recurring expenses, the tab is up, too. The monthly cable television bill, for example, is 13 percent higher for the same service. On a more modest scale, our average grocery bill was 4 percent higher in 2006 while we bought basically the same things.