Saturday, April 4, 2009

Deception in the grocery aisle and inflation rates?

Have you noticed that certain items at the grocery store now come in smaller packages, but you're paying the same price? I've been noticing that for about the last year or so, and it's pretty annoying. I wondered if it was a way to get around reporting on the true cost of inflation (or Consumer Price Index, CPI; here in the U.S.). Some examples I've noticed are: a pound (16 oz) of bacon is now 3/4 of a pound (12 oz); as is a pound of spaghetti or pasta. There are some exceptions, and I didn't make a detailed list prior to writing this post, though I may in a later post. Another example is what used to be an 8oz yogurt is now 6 oz. What used to be a 6 oz can of tuna fish is now 5 oz. There may be other examples, but those have been the most noticeable to me. The can of tuna was the most recent, and it made me so mad I refused to buy any. Wondering if this was reflected in government stats on inflation (because it means that in some cases food prices have actually gone up 20-25%, ounce for ounce) I found this from the (U.S.) Bureau of Labor Statistics (BLS), who release the CPI data every month. Under the question of How are CPI prices collected and reviewed? it says the following:
During each call or visit, the economic assistant collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is available, the economic assistant records its price. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, eggs sold in packages of ten when they previously were sold by the dozen) of the good or service since the last time prices were collected, the economic assistant selects a new item or records the quality change in the current item.

The recorded information is sent to the national office of BLS, where commodity specialists who have detailed knowledge about the particular goods or services priced review the data. These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments, which can range from an adjustment for a change in the size or quantity of a packaged item to more complex adjustments based upon statistical analysis of the value of an item's features or quality. Thus, commodity specialists strive to prevent changes in the quality of items from affecting the CPI's measurement of price change.
Note that a change in quantity of the theoretical dozen (12) eggs down to a quantity of 10 is called a 'quality change', Or, they'll just select another item if there is a change in 'quality'. Then note the last sentence, where it says that they have specialists that strive to prevent changes in quality (not quantity) from affecting the measurement of price change. I wonder if they're related to the same geniuses that priced the derivatives for 'mortgage-backed securities' that have sent some banks into bankruptcy? Those are what I call 'weasel words'.

It may be that I'm mistaken about the wording or actual result of this, and if so I'll note it here. But to me, a 'change in quality' is when they use different ingredients, like using corn syrup instead of sugar. But as far as I know, tuna is tuna, and if the package size went from 6 oz to 5 oz, then it's a change in QUANTITY and not QUALITY.
I just did a search for 'package size AND inflation' and came up with a few interesting articles: Food inflation: A truly painful downsizing as well as: Less is more: Packaging Design & Inflation, as well as: Hidden Inflation: The Sneaky Way Manufacturers Raise Prices They all have other examples of food package size changes than the ones I had noticed.

So what's the solution? In my unscientific survey, it appeared to me that I was more likely to find that imported pasta (i.e. from Italy) was still available in a 1 lb (16 oz) package, and the same with bacon from Canada. I suspect it may tie in to the whole notion of publically-traded companies having to deliver 'shareholder value' (a nice buzzword likely made up by lawyers). Or if it's practical, buy in bulk where a pound is still a pound, at least for now. I may break down and buy a can of tuna someday, but for now I just go with chicken salad, egg salad or peanut-butter for my sandwiches. Other comments or suggestions are welcome, too!

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