Getting details on retail
Shoppers for the government help determine CPI
Minneapolis — Armed with a badge and a tablet computer, Sandy Zeiss walked into a Minneapolis auto-repair shop last Wednesday and peppered an employee with detailed questions about the cost of a brake job for a six-year-old foreign compact car.
Zeiss drives a two-year-old Dodge Caravan with brakes that work like a charm. But it’s routine for her to price things she has no intention to buy. Zeiss is an economic assistant for the U.S. Department of Labor, responsible for compiling prices for the Consumer Price Index, or CPI, a closely watched measurement of inflation.
The CPI is the product of 350 economic assistants like Zeiss across the country who price some 80,000 goods and services, including food, housing, a gallon of gas–even newspaper subscriptions. Generally the most frequent purchases are tracked monthly, while others such as clothing, doctor visits, funeral expenses and cars are priced every other month.
U.S. consumer prices rose 0.2 percent in June, a slower rise than in May.
That’s still 4.3 percent higher than last June. Led by medical care, education costs, and rent for housing, the increase was the sixth in a row. The core CPI, 50,000 of those goods–minus food and energy items which are considered more volatile–rose 0.3 percent.
That was enough for some economists to conclude that the Federal Reserve is likely to boost interest rates again in three weeks, raising the cost of borrowing money for the 18th time in two years.
The stock market surged more than 200 points on investor hopes that an August interest-rate increase would be the last, if it happens at all.
The CPI also is closely watched by a variety of people outside the Fed. It’s used by governments to adjust different benefits and brackets, and affects anyone paying taxes, receiving Social Security checks or relying on military benefits or food stamps.
Businesses buying equipment care if prices are going up or down. Investors care because inflation affects the price and performance of stocks and bonds.
“When inflation goes up, price of bonds goes down because the interest earnings in terms of buying power goes down,” explained University of Minnesota economics professor Ed Foster. Stock market investors fear rising interest rates and their impact on earnings.
Zeiss understands the power of the CPI, but her role — she’s responsible for up to 100 items — is dictated by economists and statisticians in Washington who decide what to include based on surveys in which urban dwellers reveal how and where they spend their money. New items are rotated into into the 80,000-item shopping cart and others retired as consumer tastes change.
The questions Zeiss asks also can change. For example, consumer concern about fuel efficiency prompted the Bureau of Labor Statistics to add mileage data to the checklist for new vehicles. Cellular phones, cable TV, and the cost of sweeteners excluding sugar also were recently revised. Economists synthesize the data Zeiss and others collect using weighted averages that ensure that prices of less frequent, more expensive purchases don’t overshadow regular, less costly purchases. Voila–the CPI.
Zeiss left the auto repair shop to collect prices for a full-service burial with a 12 gauge stainless steel casket, wooden handles, and a crepe interior.
She can’t price any old casket- it must be the one described in her computer. Zeiss’ work last week was for the July index, which comes out Aug. 16. She has a ten-day window to collect the data.
After the mortuary, she visited a hardware store in search of a particular ax, and a grocery store to price an 8 ounce bag of a certain brand of finely shredded cheddar cheese.
No two days are the same for Zeiss, who also collects data on food from farmers markets and vending machines. She queries colleges about tuition charges and fees. And until last month she had a milkman on her route. “We go where the consumer spends his money,” Zeiss said.
While her knowledge of price points and style changes makes her quite the marketplace maven, she’d never spill the beans about the cheapest place to buy diapers or fill a prescription. Government regulations require that the store and brand of items in the index be kept strictly confidential.
Economic assistants often have economics, retail marketing or interviewing experience. Zeiss, a former teacher who went back to school for a master’s degree in business administration, learned about her job when she sat down next to an economic assistant during a shopping break in a department store coffee shop. It just so happened the economic assistant was leaving her job and Zeiss was looking for one.
“I thought the job was a wonderful match,” she said.
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