North Dakota Consumer Prices
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NDSU Fall Conference presentation by Lori Scharmer and Debra Pankow
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North Dakota Consumer Prices
- 1. Understanding the Consumer Price Index
- 2. CPI- Consumer Price Index Cost of Living relative to a base period CPI is 100 in base period 1982-84 Cost of market basket of goods Urban households, other demographic regions Collected Monthly
- 3. Housing 41.4% Transportation 17.4% Food 16.2% Energy 8.2% Medical Care 6.4% Apparel and Upkeep 6.1% Other 3.9%
- 4. Assumes market basket fixed Slow to recognize new products Hard to measure quality improvements
- 5. Purchasing power of your income How many market baskets can it buy? Nominal income better predictor
- 6. .05 Hershey bar .05 New York Times .04 First class postage stamp .31 Gallon of regular gas .28 McDonald’s double hamburger $2,529 Full size Chevrolet
- 7. $30 in 1961 $100 in 1983 $212 in 2008
- 8. Babe Ruth (1931) $80,000 A Rod (2010) $33 million
- 9. Nominal wage was $1.65 hour 1952 Rose to $17 in 2007; 10x increase Real wages peaked in mid-1970’s!
- 10. Situation - Consumers across North Dakota are being impacted by the rising price of food, gas and housing. Is oil activity impacting prices? Will the drought impact prices?
- 11. Extension Response – ND Consumer Price Survey Family Economic Program Team Compare: • oil impacted vs. non-oil impacted • size of community • type of business.
- 12. Small basket of food items that can easily be found in most stores County Extension staff and Volunteers Gather prices at their local groceries and supermarkets Continue through 2013
- 13. County Extension staff record prices in the online survey Data and talking points provided to County offices each month. News releases provided ????
- 14. 37 Counties Gathering Prices September 2012 Pembina Renville Divide Burke Rolette Bottineau Cavalier Towner Williams McHenry Walsh Pierce Mountrail Ramsey Ward Grand Benson Forks McKenzie Nelson McLean Eddie Wells Foster Griggs Steele Traill Mercer Dunn Billings Oliver Kidder Stutsman Golden Burleigh Barnes Cass Valley Morton Stark Slope Hettinger Lamoure Ransom Logan Richland Grant Bowman Adams Sioux Dickey Sargent McIntosh
- 15. ND Counties Impacted Oil Counties High Impacted Oil Counties Pembina Renville Divide Burke Rolette Bottineau Cavalier Towner Williams McHenry Walsh Pierce Mountrail Ramsey Ward Grand Benson Forks McKenzie Nelson McLean Eddie Wells Foster Griggs Steele Traill Mercer Dunn Billings Oliver Kidder Stutsman Golden Burleigh Barnes Cass Valley Morton Stark Slope Hettinger Lamoure Ransom Logan Richland Grant Adams Sioux McIntosh Dickey Sargent
- 16. In Sept. the high price of food package was $50.36 which is 52% higher than the lowest price of $33.09. In Oct $51.56 – 66% - $31.07 Theaverage cost of our package was $41.37 in September. $40.65 in Oct.
- 17. In Sept. the average price of package in Oil Impacted Counties was $42.24 compared to the rest of the state at $40.69. Oct. - $40.90 - $40.48
- 18. InSept. our smaller local grocers had an average food package of $43.67 which is just 11% higher than the average price of the package at a large supermarket at $39.28. Oct. - $44.00 - 16% - $37.95
- 19. In Sept. 14 oz box of Cheerios sold at a high price of $6.99 and a low price of $2.69. The high price found at a local grocery store and the low price at a national chain store. Oct. - $6.99 - $2.50
- 20. A gal of 2% milk in North Dakota Our highest milk price was $6.67 - $6.67 Lowest Price was $2.79 - $2.89 Average Price was $4.65 - $4.67
Editor's Notes
- How do we measure the overall cost of living?Has the cost of living increased in ND, and how does that compare with the overall US?
- Actual expenses and purchases vary with family size, age of members, region and income; CPI can help track major changesData availablePrice indexes are available for the U.S., the four Census regions, size of city, cross-classifications of regions and size-classes, and for 26 local areas. Indexes are available for major groups of consumer expenditures (food and beverages, housing, apparel, transportation, medical care, recreation,education and communications, and other goods and services), for items within each group, and for special categories, such as services. Monthly indexes are available for the U.S., the four Census regions, and some local areas. More detailed item indexes are available for the U.S. than for regions and local areas. Indexes are available for two population groups: a CPI for All Urban Consumers (CPI-U) which covers approximately 87 percent of the total population and a CPI for Urban Wage Earners and Clerical Workers (CPI-W) which covers 32 percent of the population. Some series, such as the U.S. City Average All items index, begin as early as 1913. CoverageThe CPI represents changes in prices of all goods and services purchased for consumption by urban households. User fees (such as water and sewer service) and sales and excise taxes paid by the consumer are also included. Income taxes and investment items (like stocks, bonds, and life insurance) are not included. The CPI-U includes expenditures by urban wage earners and clerical workers, professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, retirees and others not in the labor force. The CPI-W includes only expenditures by those in hourly wage earning or clerical jobs. Sources of dataPrices for the goods and services used to calculate the CPI are collected in 87 urban areas throughout the country and from about 23,000 retail and service establishments. Data on rents are collected from about 50,000 landlords or tenants. The weight for an item is derived from reported expenditures on that item as estimated by the Consumer Expenditure Survey. Reference periodPrices are taken throughout the month. Forms of publicationMonthly news release. Consumer Price Index. Electronic access available. Historical data in Handbook of Labor Statistics. Electronic access available. Diskettes LABSTAT database. UsesAs an economic indicator. As the most widely used measure of inflation, the CPI is an indicator of the effectiveness of government policy. In addition, business executives, labor leaders and other private citizens use the index as a guide in making economic decisions. As a deflator of other economic series. The CPI and its components are used to adjust other economic series for price change and to translate these series into inflation-free dollars. As a means for adjusting income payments. Over 2 million workers are covered by collective bargaining agreements which tie wages to the CPI. The index affects the income of almost 80 million people as a result of statutory action: 47.8 million Social Security beneficiaries, about 4.1 million military and Federal Civil Service retirees and survivors, and about 22.4 million food stamp recipients. Changes in the CPI also affect the cost of lunches for the 26.7 million children who eat lunch at school. Some private firms and individuals use the CPI to keep rents, royalties, alimony payments and child support payments in line with changing prices. Since 1985, the CPI has been used to adjust the Federal income tax structure to prevent inflation-induced increases in taxes. Major research in progressContinuing research on technical improvements in the calculation of the CPI Continuing work on the next major weight revision of the CPI
- In reality, consumers substituteOverall, bias is estimated to be an upward bias in the CPI of about 1.1% a year (Boskin Commission)
- Nominal price list or actual cost given current value of moneyUseful for comparisons within same time period and in same locationCannot make meaningful comparisons over time and locations
- Costs are relative to general economic conditions in place and time; opportunity cost of what was passed up to buy item
- Income of $21,200 in 2007 = $10,000 in 1983 = $3000 in 1961
- Babe Ruth could buy $1.1 million worth of productsIntersting President Hoover made $75000After adjusting for inflation, Hoover made more than twice what the current president of the US makes!
- Consumers across North Dakota are being impacted by the rising price of food, gas and housing. Is oil activity impacting prices? Will the drought impact prices? The North Dakota economy is going through unprecedented times which may also be influencing the price of consumer goods which in turn impacts the family budget.
- The North Dakota Consumer Price Survey has been developed by the NDSU Extension Family Economic Program Team. The intent is to determine a trend in food and gas prices by the area of the state (oil impacted vs. non-oil impacted), by size of community and by type of business. This survey is not intended to be a comprehensive study but a snapshot of prices for a small basket of common food items that can easily be found in most stores selling food. Extension staff in counties across the state will gather prices at their local groceries and supermarkets The survey will continue monthly through the rest of 2012 and through 2013. Monthly reports will be available.
- This survey is not intended to be a comprehensive study but a snapshot of prices for a small basket of common food items that can easily be found in most stores selling food. Extension staff in counties across the state will gather prices at their local groceries and supermarkets The survey will continue monthly through the rest of 2012 and through 2013. Monthly reports will be available.
- County Extension staff in their county and record them in the online survey. Please gather prices in the first 2 weeks of the month. At the beginning of each month we will provide local Extension Agents with a report including the prices gathered and comparisons across the state.
- Across the state the highest total price for our package of food was $50.36 which is 52% higher at than the lowest price of $33.09.The average cost of our package was $41.37 in September.The average price of the whole package in Oil Impacted Counties was $42.24 and the average in the rest of the state was $40.69. The size of the community may have an impact on the price of milk. In our smallest communities the average price of a gal of 2% milk is $5.68 with the highest price being $6.65. In our largest communities the average price was $4.02 with the lowest price $3.25.If we look at a 14 oz box of Cheerios sold across the state we found a high price of $6.99 and a low price of $2.69. The high price was found at a local grocery store and the low price at a national chain store.Our smaller local grocers had an average food package of $43.67 which is just 11% higher than the average price of the package at a large supermarket at $39.28. All of us living in a small community know how valuable the local grocery store is to the community!The price of regular gas ranged from a high of $4.14 to a low of $3.65 for an avg. $3.92 although as we all know the price of gas is a very fluid mark!
- Across the state the highest total price for our package of food was $50.36 which is 52% higher at than the lowest price of $33.09.The average cost of our package was $41.37 in September.The average price of the whole package in Oil Impacted Counties was $42.24 and the average in the rest of the state was $40.69. The size of the community may have an impact on the price of milk. In our smallest communities the average price of a gal of 2% milk is $5.68 with the highest price being $6.65. In our largest communities the average price was $4.02 with the lowest price $3.25.If we look at a 14 oz box of Cheerios sold across the state we found a high price of $6.99 and a low price of $2.69. The high price was found at a local grocery store and the low price at a national chain store.Our smaller local grocers had an average food package of $43.67 which is just 11% higher than the average price of the package at a large supermarket at $39.28. All of us living in a small community know how valuable the local grocery store is to the community!The price of regular gas ranged from a high of $4.14 to a low of $3.65 for an avg. $3.92 although as we all know the price of gas is a very fluid mark!
- Across the state the highest total price for our package of food was $50.36 which is 52% higher at than the lowest price of $33.09.The average cost of our package was $41.37 in September.The average price of the whole package in Oil Impacted Counties was $42.24 and the average in the rest of the state was $40.69. The size of the community may have an impact on the price of milk. In our smallest communities the average price of a gal of 2% milk is $5.68 with the highest price being $6.65. In our largest communities the average price was $4.02 with the lowest price $3.25.If we look at a 14 oz box of Cheerios sold across the state we found a high price of $6.99 and a low price of $2.69. The high price was found at a local grocery store and the low price at a national chain store.Our smaller local grocers had an average food package of $43.67 which is just 11% higher than the average price of the package at a large supermarket at $39.28. All of us living in a small community know how valuable the local grocery store is to the community!The price of regular gas ranged from a high of $4.14 to a low of $3.65 for an avg. $3.92 although as we all know the price of gas is a very fluid mark!
- Across the state the highest total price for our package of food was $50.36 which is 52% higher at than the lowest price of $33.09.The average cost of our package was $41.37 in September.The average price of the whole package in Oil Impacted Counties was $42.24 and the average in the rest of the state was $40.69. The size of the community may have an impact on the price of milk. In our smallest communities the average price of a gal of 2% milk is $5.68 with the highest price being $6.65. In our largest communities the average price was $4.02 with the lowest price $3.25.If we look at a 14 oz box of Cheerios sold across the state we found a high price of $6.99 and a low price of $2.69. The high price was found at a local grocery store and the low price at a national chain store.Our smaller local grocers had an average food package of $43.67 which is just 11% higher than the average price of the package at a large supermarket at $39.28. All of us living in a small community know how valuable the local grocery store is to the community!The price of regular gas ranged from a high of $4.14 to a low of $3.65 for an avg. $3.92 although as we all know the price of gas is a very fluid mark!