posted by Decision Innovation Solutions on Wednesday, March 23, 2011
The Consumer Price Index Data published by the Bureau of Labor Statistics for February 2011 has been making quite a stir in the news the past few days. It states that the index for food rose 0.6 percent in February and 0.5 percent in January. This is a major concern considering that the previous months increases were only 0.1 and 0.2 percent increases. The largest increases in indexes were the fruits and vegetables and the meats, poultry, fish, and eggs. Out of the six major grocery store food groups five had an increase with only cereals and bakery products not seeing an increase in index value. The dairy and related products index increased 0.6 percent.
In the grocery store I seem to watch the price of a gallon of milk more than I watch the prices of the other grocery items. I know that this comes from being raised on a dairy farm and therefore never had to buy a gallon of milk growing up. After having moved to the state of Iowa a short time ago, the biggest difference I noticed in the grocery store, of course, was the price of milk. I went from paying $1.50 per gallon to over $3.00 per gallon here in Iowa.
The thoughts that come to mind when contemplating the large change in price are as follows. From a numbers stand point, according to the 2009 State of Agriculture, published by the USDA NASS, Iowa ranks 12th in the nation for total milk production whereas Utah ranks 23rd for total milk production. The states of Iowa and Utah consume more milk than is produced, making them both net importers of milk for consumption. When looking at a map of where dairies are located in Iowa you find that the large dairy concentration is found in the northeast and northwest corners of the state, which is not where I currently reside. Utah's second highest county for overall milk production just happened to be the county in which I lived. So, one can conclude that some of the difference in price can be attributed to transportation costs. For example, the index for gasoline increased 4.7 percent in February, 3.5 percent in January, and 6.7 percent in December with an increase of 19.2 percent in the past year. Of course there are many other factors that contribute to the consumer price of milk and other food prices in general, but we'll save those topics for another post.
- consumer price index