My Self-Calculated CPI Basket of Goods & Services
Last week, I published my dislike of the way the federal government calculates the Consumer Price Index (CPI). In that post, I declared I was going to calculate my own inflation number using my own basket of good and services and my own methodology.
Right off the bat, I have to admit this is my own calculation and basket. It reflects my life and how I think inflation should be reported. That said, I welcome comments about how and why I do what I do with it.
I’m going to report my CPI monthly (if I can remember to do it). Here’s the basket of goods and services I’ll be tracking:
- Regular gasoline (from the Sunoco I typically use)
- Gallon of skim milk (purchased from Aldi)
- Dozen eggs (purchased from Aldi)
- Target brand toddler wipes
- Store brand frozen waffles
- Store brand boneless, skinless chicken breast
- Chick-fil-a chicken sandwich meal
- 9-pack Juicy Juice drink boxes
- Grapefruit (from the produce market we use)
- Bananas (pound)
- Apples (pound)
- DVD rental from library
- Gas & electric bill (as compared to last year’s)
Let’s see how this goes…
inflation
May 26th, 2007 at 4:24 pm
Looks to me that you are really heavily tilting this towards food items. I know that this basket represents the bulk of your purchases, but as your life changes (or you change it in response to changing prices) the basket could quickly be meaningless for you.
I’d think about adding some less frequent purchases, but lower their weighting as well. For example, I typically need one or two new pairs of chinos for work. Say I get them for $50 each. That’s a $50 item in my basket divided by six months (2 pairs per year) or $8 and change. That’s an item that’s easy for me to track and allows me to look at inflation’s impact on my budget as it occurs in the clothing sector.
I can categorize your items into four areas: food, energy (gasoline, gas, electric), household (baby wipes) and entertainment. You don’t have any housing cost (though I suspect that it is a big portion of your budget — if not the biggest). That means your basket is going to dramatically overstate your personal CPI if your mortgage is fixed-rate or your rent rises slowly. If you limit it so tightly it may reduce the benefit tracking it will provide you.
May 26th, 2007 at 11:54 pm
I agree with Kevin that clothes are a good idea. I would recommend adding sneakers or maybe jeans depending on how often you buy them. I too hate the CPI, I think that I will have to check back and see how you do. I was actually inspired to write a post on this topic when my cheese jumped in price by more than 10%, but I haven’t finished it yet. If you eat any higher end boxed products your might want to check on those as well as I’ve noticed a lot of their prices moving upwards, e.x. Near East rice.
July 20th, 2007 at 8:14 am
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