The Consumer Price Index does (intentionally) not include food and energy.
– Food prices soar as incomes stand still (CBS News, Feb 16, 2014):
NEW YORK – Writer Jen Singer, the mother of two teenage boys, wrestles with her grocery list every week to keep the household budget from getting away from her.
“I’d like the government to stop by my house, come food shopping with me and see where the real costs are,” she said.
The adage “An apple a day keeps the doctor away” is impossible thanks to apple prices, she said.
“We go through one of these every few days,” she said, holding a loaf of bread. “It’s a big part of my take home pay.”
It’s is not her imagination. While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it’s on sale.”Oh my god!” Singer said as she spied bacon for $3.
“The things that are going up in price are the things I absolutely need to buy,” she said. “It’s the meat, it’s the milk, it’s the eggs and it’s getting out of hand.”
ConvergEx market strategist, Nick Colas, said that mothers could tell the government a lot about inflation.
“Food inflation is far greater than the government thinks it is,” he said.
But the big problem for families: Wages are not budging.
“If my income isn’t going up, how am I going to keep up with inflation?” Singer asked.
Median income is up only 1 percent a year. For Singer, that makes it hard to save for college tuition – which has been rising 6 percent to 8 percent every year for five decades.
“The price of college is terrifying and so we’re looking at cheaper schools or scholarships, I hope,” she said. “You know, ‘Run faster in track.’ That will really help me out a lot.”
Many are concerned that while economists paint a benign picture, middle-class families are quietly struggling.
“The disconnect is severe, because it’s the economists that make policy but it’s the people who have to live with the outcome of that policy and that disconnect is growing to the point where I think it has to break soon,” Colas said.