I went grocery shopping and bought my “basket of goods” to track inflation. I had intended to do this quarterly but I’ve been swamped with too many personal and business projects to keep up. In any event, here’s my basket of goods and the rate of inflation.

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April 2008

Item Unit Cost Total Cost
1 Dozen Eggs $2.39 $2.39
Horizon Milk – 1 Gallon $5.99 $5.99
14.5 oz Box Cereal $2.24 $2.24
1 Loaf of Bread (24 oz) $2.48 $2.48
12 oz Bacon Pkg* $1.88 $1.88
Rib eye Steaks 2.24 lbs $8.48/lb $19.00
2.5 Gallon Ozarka Spring $2.69 $2.69
Total   $36.67

*A side note, the Bacon package was on sale and rather than distort the numbers, I used the sale price. The non-sale price was $2.19. Now let’s compare this to the basket of goods I bought back on September 2007.

September 2007

Item Unit Cost Total Cost
1 Dozen Eggs $2.09 $2.09
Horizon Milk – 1 Gallon $5.99 $5.99
16 oz Box Cereal $2.39 $2.39
1 Loaf of Bread $2.19 $2.19
12 oz Bacon Pkg $2.68 $2.68
Rib eye Steaks 2.32 lbs $7.98/lb $18.59
2.5 Gallon Ozarka Spring $2.69 $2.69
Total   $36.62

So overall, the cost of things are the same right? Inflation is at ZERO percent just like the government says!

Wait a minute….upon closer inspection, I noticed that the box of cereal was a tad bit smaller than the one I bought in September and as I look closely, I noticed that the box is now 14.5 oz and not 16 oz so the adjusted price of the box of cereal is actually $2.47. I’m also getting a little less beef and the grocer conveniently packaged the cuts to seem like the same price in the past but the steaks were noticeably smaller. Unfortunately, I didn’t capture the exact size of the loaf of bread back in September so I can’t compare those numbers for portion shrink.

So let’s compare apples to apples.

Inflation

Item Sep 07 Apr 08 % Change  
1 Dozen Eggs $2.09 $2.39 14%  
1 Gal Org. Milk $5.99 $5.99 0%  
16 oz Box Cereal $2.39 $2.47 3%  
1 Loaf Bread $2.19 $2.48 13%  
12 oz Bacon $2.68 $1.88 -30%  
Rib Eye Steak $7.87/lb $8.48/lb 7.7%  
2.5 Gal Water $2.69 $2.69 0%  
         

So beef is up 7.7 pct, bread is up 13 pct, and eggs are up 14 pct but the government expects you to substitute beef for bacon because it’s on sale but what about bread, cereal and eggs? I guess cattle ranchers, wheat farmers and poultry farmers will all go out of business or switch to raising pigs because after all, we all substitute expensive stuff for cheaper stuff right?

Notice that I’m not even tracking gasoline because that’d give you a heart attack. It’s no wonder why there are riots in Egypt and the Philippines are panicking over wheat, China is panicking over rice and Mexico is angry over the price of tortillas. A $0.10 increase for cereal or bread might not be big deal to you but multiply that x 2 billion people and you begin to see the problem.

But there’s more to the slight of hand tricks because as you can see from the image below, fast food chains are now charging to “upgrade” to medium combos. I don’t eat fast food too often but the other day I drove by Wendy’s and ordered a combo. I was startled by the sign aside which stated that it would cost $0.59 to “upgrade” to medium size. Medium size used to be the standard size!

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