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The cruelest tax of all: Fudging the inflation numbers

“There are three kinds of lies — lies, damned lies, and statistics.” Mark Twain most often gets credit for that gem, although it's also attributed to Benjamin Disraeli and several others going back to the mid-1800s.

Statistics is (and let's not get into the singular/plural argument) somewhat like the Bible, in that data can be used pro or con for almost any argument, depending on the particular bias of the arguer.

But it kinda stretches credibility the way the USDA, the Federal Reserve, the mainstream media, and even some farm organizations handle and report inflation data relating to food and energy.

Anyone who has exposure to grocery prices with any regularity knows what's been happening over the past few years — major supermarket sticker shock, as prices of fruits, veggies, canned goods, and packaged goods keep rising. Ditto for prices at the gas pump.

Yet the USDA's stats and media reports have brushed the increases aside as benign or moderate.

While the Consumer Price Index (CPI) does include the rising costs of food and energy, the Federal Reserve terms them “variable” or “volatile” and strips them out, calling what's left Core CPI Inflation. Which the media dutifully report.

Variable? Yes. Volatile? Certainly. But because food and energy constitute major chunks of every family's yearly expenditures, and they've been steadily going up, one can only wonder at the reasoning behind their being excluded in inflation calculations.

Maybe it's like blinders on a mule: If you don't see the cottonmouth moccasin to the side, it isn't really a threat.

The public went into a frenzy of outrage 25 years or so ago with predictions that bread, then selling for about 20 cents, could hit $1 a loaf. Today, it's difficult to find even store brand bread for $1 (the third quarter national average was $1.54).

Food and energy prices do indeed vary, often substantially due to weather, supply disruptions, etc., but when they retreat after a runup, more often than not they settle at a higher level than where they were originally.

As if food price increases were not bad enough, many manufacturers reduce package content volume (a 30-oz. “quart,” a 14-oz. “pound”), while keeping the price the same or raising it.

The U.S. Department of Labor reports that food inflation is now about 4.2 percent, on an annualized basis — twice the overall inflation rate.

And the media are beginning to report on the escalation in food prices.

It's interesting that for almost 150 years, the Consumer Price Index wavered little. But since World War II, it has risen sharply, as has inflation.

In 1945, the CPI was 18, near where it had been for a century or more. In 1984, it topped 100 for the first time; in 2006, it was 201.6.

In 2006, it would take $11.46 to buy what $1 would buy in 1945.

What has not gone up is the farmer's share of the food dollar. That peaked 1972-74, when the USDA pegged it at 35 cents. Today, it's about 20 cents — which is worth only 5 cents in purchasing power compared to 1974.

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