Time Cost (in Minutes), Selected Food Items
Although this is not a complete analysis, the chart above (click to enlarge) provides some additional evidence that there is not a lot of food inflation right now in the U.S. In the post below, there are a lot of comments that are critical of the way the BLS calculates inflation, with some general consensus that the BLS and CPI massively "under-report inflation."
So here's an alternative approach to measuring food inflation by calculating the "time cost" of food, using: a) actual retail food prices ("Average Price Data" U.S. city average) in December 2008, December 2009, and December 2010, and b) the average hourly earnings in those same months for "Total Private Industries."
For example, in December 2008, the food item "Ground chuck, 100% beef" had an average retail price of $3.00 per pound, and the average hourly wage in that month was $18.39 (or 30.65 cents per minute), which would mean that the average worker in December 2008 would have spent 9.78 minutes working at the average wage to earn enough income (disregarding taxes) to purchase one pound of ground beef. In December 2009, the "time cost" of ground beef would have been 9 minutes, and in December 2010 the "time cost" of hamburger was 9.14 minutes (see chart above). Therefore, in the two-year period between December 2008 and December 2010, the "time cost" of hamburger fell by 6.54%, and in the one-year period between December 2009 and December 2010, the "time cost" of hamburger rose by 1.56%.
The chart above shows comparable "time cost" calculations for the food items in the BLS list of average price data for its "Top Picks
," and this measure of food inflation should avoid some of the dueling criticisms of the CPI measure of food inflation (upward bias vs. downward bias) by using two nominal measures (retail prices and wages) to calculate the cost of food in what's ultimately most important: the amount of time spent working to earn the income needed to buy food at retail prices.
Although the list is not exhaustive (and I'll provide a more comprehensive list later), the initial results of these items confirm my previous report that there does not appear to be a lot of food inflation in the U.S. right now. Especially compared to food prices two years ago, there's no question that the "time cost" of all of these food items fell between December 2008 and December 2010, on average by 5.54%. Over the last year (December 2009 to December 2010), the changes in the "time cost" of these food items has been mixed: the "time cost" of bread, chicken, eggs, orange juice concentrate, and tomatoes has fallen, while the "time cost" of hamburger, milk, apples, oranges and bananas has risen.
I'm working on a more comprehensive list of the "time cost" of food items and will post when it's complete.