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Downsized Products Don't Escape the Consumer Price Index

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Monday, 28 March 2011 21:47
The NYT had an interesting article on the downsizing of food products by manufacturers in order to conceal price increases. It is worth noting that these price increases would be picked up by the Bureau of Labor Statistics (BLS) in constructing the consumer price index (CPI). The BLS price checkers carefully assess the quantities in products and if these change, they adjust the price charged accordingly.
Comments (3)Add Comment
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written by izzatzo, March 29, 2011 5:11
It makes perfect sense to shave weight off a product sold by the ounce to hide the increased price per unit paid.

It's part of the socialist Obesity Reduction Program designed to reduce the portion size of fast foods and arrest those who attempt to buy two portions or more.

Any economist knows that once overweight consumers figure out that unit price is higher they will buy less, not more.

The only exception is Veblen Eaters who have upsloping demand curves and eat more expensive food to impress other eaters.
Give me less and call it more.
written by James Maiewski, March 29, 2011 8:03
There have been several items in my local media lamenting the lack of a COLA increase in SS benefits.

Although an interesting debate could be developed around the accuracy of CPI figures, these items are (alas, as one expects nowadays) mostly devoid of context. I think it would be helpful if you discussed the COLA, and how it makes little sense to wish for higher inflation so that the numbers on one's check will be better, and even that in periods of lower inflation (or lower CPI, in any event), a constant benefit is actually a raise compared to a COLA in the face of inflation.

I should add that this discussion should address how COLAs include headline CPI, vis-a-vis the oft quoted seniors lamenting the increases in the cost of food and fuel.
donyork
written by Don York, March 30, 2011 1:42
Write more such articles, thank you!I will bookmark your blog.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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