Practical Dad

PracticalDad Price Index:  Moving Again in September 2013

PracticalDad note: After an odd summer, I'm officially back and the writing will again pick up. Thanks for reading...

After an eight month period of decline, the PracticalDad Price Index rose by half a percentage point to 108.39 (All Items Index) and 113.76 (Food-only Index) in September 2013.  

Since it's inception in November, 2010, the 47 grocery item PracticalDad Price Index rose until it peaked in December 2012 at an index level of 108.07 for all items and 114.33 for the separate Food-only items index (November 2010 = 100).  In layman's terms, the prices were 8.07% and 14.33% higher than at the index creation.  But after the December 2012 peak - which itself was a full percentage point rise from November 2012 - the indices dropped; by August 2012, the Food-only index was 113.14, more than a full percentage point below the peak eight months previously.  But after this decline, the prices are starting to move upwards again in September 2013; it's as if a car were spinning tires wildly and accelerating quickly after they gained purchase on the wet roadway.

One of the items that I was watching from the August 2013 Price Index was the cost of beef, since the size of the cumulative national herd was at levels not seen in decades.  Sure enough, the cost of a pound of 80% ground rose by 2.5% over the month and I'll continue to watch.  What has been fascinating about the process is seeing how grocers are finding new, lower cost food suppliers when they believe that their market can no longer absorb price increases.  September was another instance in which a single store found a new supplier for a generic product; a grocer's generic box of spaghetti - still at 16 ounces instead of the stealth adjusted 12 ounce box from one national producer - dropped from $1.29 to $1.00/box, a 22% drop.  This is on the heels of previous drops, since November 2010, in products like tomato sauce, diapers and women's pads.  But the monthly indices are still up a half percentage point, despite this downward adjustment.

The results of the past four months are as follows:

Month/Year          Total Index          Food-Only Index          Spread

6/13                        107.65                  113.55                            5.90

7/13                        107.57                  113.13                            5.56

8/13                        107.90                  113.14                            5.24

9/13                        108.39                  113.76                            5.37

 

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