My Frustration with Inflation Indicators
In the past decade or so I've become frustrated with measures of inflation like the Consumer Price Index (CPI) or commentators on television talking about inflation being down, while grocery prices continue to rise. I know intuitively that we get much less groceries in the bag for the dollar, than we did just a few years ago, but I didn't have my own data. It occurred to me that, we can just do things. We can test and measure many of the costs and changes that impact us without waiting for a study from some think-tank or government agency. So I went to the local grocery store after some deliberation, and recorded the prices for 28 different grocery items that I thought might reflect or capture a wide spectrum of grocery items.
The Milk and Cereal Grocery Index
The data for grocery items was collected at a Food Lion grocery store, in Smithfield, North Carolina, on February 18, 2025. The retail prices, rather than sales prices were logged to collect what appeared a true price. A wide range of items were selected. Where possible a popular name brand choice was selected that would likely be available at a variety of grocery stores across the United States.
The current Milk and Cereal Grocery Price Index is 695. This number was computed by calculating price per ounce of the 28 selected items, adding their value in cents. The unweighted average price per ounce of the 28 items was $0.25. In simple terms when the Index goes up grocery prices are rising and when it goes down prices are decreasing.
Future Metrics
Over time I will collect grocery prices at the same store using this item selection as the baseline. I will add in data collection events on the same day at multiple stores to measure variation between stores. In retrospect, it may make sense to add in more produce selections, and pork to the index. In the event items are added to better capture an adequate range of grocery categories, the original index will be maintained for useful comparison. Readers are encouraged to recommend changes to the list to better capture average grocery price changes over time.