What is happening to the price of a market-basket of food due to the economic effects of the Covid-19 Pandemic upon: (1) the upheaval in the supply chain; (2) the collapse in aggregate family income?
This two-pronged question is the reason for the resumption of the PracticalDad Price Index after an almost four year hiatus. We know from the US Department of Labor’s report for April 2020 that food prices rose by the highest monthly amount in 46 years due to the supply chain upheaval. It’s bad, but it only gives for general food groups (meats, vegetables, etc) and doesn’t go into further depth than that. This kind of information will also miss the impact of the supply chain’s efforts to mitigate the cost increases and attempt to keep foods affordable for the shopper.
The modified index (for the original Index introduction, see here) will focus solely upon the original 37 foodstuff items from the original index, broken into categories of Meat, Dairy, Bread, Staples, Cereal, Produce and Grocery items. The pricing will occur within the first five days of each month at the same three groceries, each unrelated to one another. The groceries represent three separate tiers of size: local, Mid-Atlantic regional chain, international chain. The prices for the items from the three stores will be averaged and the the mean prices added to find the total cost for the composite basket. The total for the composite basket as of the pricing for May, 2020 will serve as the index baseline of 100. The total for the month composite baskets moving forward will be likewise totaled and their results shown as a comparison to the initial index level of 100.
Caveats:
- This is not meant to be representative of national trends. This is three store survey in a single county and is meant to be a data point in a larger picture.
- I will discontinue the Index if I believe that the supply chain is so kinked that I cannot present an accurate picture in good faith.
- I cannot objectively verify inventory quantity within the stores but I can provide anecdotal commentary about what I am seeing and that can serve as anecdotal evidence.
- Within the past month, I have noted that products that are simply gone from the supply chain have not only disappeared from the shelves , but the shelf labels themselves have been removed or covered over with blank labels. If the item is not on the shelves but the label is present, I will treat that item as temporarily out of stock and report the price as listed on the shelf label.
- The items priced are almost all store- or off-brand, which would be purchased by a shopper attempting to extend a fixed food budget. There are rare instances in the Index in which a name-brand product is used and that same product will be priced moving forward to assure consistency.
- Pricing will occur, whenever possible, in the morning.
- If new alternatives are offered for an item, as happened continuously in the old Index, that alternative will be used then and afterwards to assure consistency. The same will happen with package sizing.
The May 2020 FPI results are shown in the linked pdf below. Note that a few items are not listed in two columns; these items were part of the original survey and they were not available in those stores, even searching for shelf labels.
The Total Cost of the May 2020 FPI is $88.51 and that amount will serve as the Index level of 100.
