An Inflation Intro

If you tune out when you hear the term “measure of inflation,” let alone the even more gripping “CPI,” try this: cost of living.

That’s the gist of what’s reflected by an important routine report due out Friday: how much we’re spending for fuel, food, shelter, coffins, cough drops and other must-haves. Compiled by the Bureau of Labor Statistics, the Consumer Price Index measures how prices for common goods and services fluctuate. The CPI for July is due out at 8:30 a.m. on Friday.

It’s a pretty broad survey: BLS workers collect about 80,000 prices each month – on items ranging from electronics to aspirin to flank steak – from some 23,000 retail outlets. Fees on services like water and sewerage also are compiled, as are average rental rates. If you happen to live in a city where the data are collected, another fun story is to get permission to go along with a BLS worker as he or she gathers info at local stores.

We’re in a period of low inflation now, because (in simplest terms) competition for the few consumers still employed and spending keeps prices down. The most volatile components of the CPI tend to be fuel and food, which are affected by seasonal conditions, weather, etc. – which probably accounted for June’s slight inflation spike, because gasoline prices at the pump tend to peak in spring.

If all of this still is too abstract for you, consider: The CPI is used to determine COLA (cost-of-living) raises for millions of Social Security recipients, people working under union contracts, federal and military retirees. Food stamp recipients, children in school lunch programs and others – about 80 million people all told, the BLS says – have their benefits and/or wages tied to the rate of inflation.

That’s a pretty large chunk of your readership, and good fodder for personal finance, consumer and labor stories. The CPI release is summarized, of course, but the 100-page plus full reports really get into minute detail if you dig hard enough –right down to the price of movie theater tickets, dental services, lettuce and tomatoes, you name it. That translates into lots of conversation starters with retailers, restaurant owners, hair stylists, funeral directors and others who sell to the general public – a wealth of story ideas. And for more localizing assistance, periodic reports are issued for major metro areas and about 27 local areas.

The CPI Web site is rife with explanatory publications, downloadable historical data and other tools. It even offers an online tutorial for using the spreadsheets.

Another handy bookmark for your investing and finance coverage: the inflation calculator that shows how the purchasing power of the dollar has changed over the years.

Yikes! It takes $7.05 now to stretch as far as $1 did when I was born! Please, don’t do the math.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.