Practical Dad

PracticalDad Price Index -January 2015

The New Year came and went and immediately afterwards, I did the routine for determining the activity of the PracticalDad Price Index of 47 items.  This composite marketbasket of 37 foodstuffs and 10 non-foodstuffs is done at the first of each month at three unrelated grocery stores in the area and has been occurring monthly since it's inception in November 2010 (November 2010 = 100).

After a signficant jump in the 37 item Food-Only Subindex from November 2014's 113.87 to December's 115.13 (November 2010 = 100), the January 2015 Food-Only Subindex dropped back to 114.00.  The Full Basket Index of 47 items (see here) actually rose slightly from December's 111.18 to January's 111.32 based upon price increases in non-food items such as soap, diapers and paper towels.

The December increase was led by a rise in the cost of a dozen large eggs, reflecting foreign demand for American supply due to Avian Influenza and I surmised then that the price would decrease again, and this occurred as the average price of a dozen eggs dropped by 19%; this was still higher than the November price before the December spike.  Dairy products also showed an improvement as Milk (1 gallon 2%) and butter (1 lb quarters) each dropped by 8.8% and 10.7% respectively.  Looking at the 37 foodstuffs in all, there were eight items with a price increase versus seven items that decreased in price, although the average price decrease was 6.58% versus an average price rise of 2.17%.

The price increases in soap and diapers were extremely small but the index was affected most by a price increase at one store - and yes, there's the downfall to a small sampling size - of paper towels by 52%.  Because this store was part of a chain, I checked at another of the same chain's stores in the area and the price for that item was consistent elsewhere so this change was not an individual store's error.  This massive increase was not seen by the other two stores as one of those stores actually had a small decrease in the cost of their paper towels (eight rolls double ply package).  What I do know is that across the past several years, this particular store with the major price increase has become a sort of canary in the coal mine for me with price changes occurring here first and then reflected elsewhere at a later time.  So we'll just have to see as the next several months go on as to whether this change is meaningful or just some isolated anomaly.

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