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New Inflation Indicator: Bagel Index
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No, the bagel index isn’t “real” in the sense that it’s a true economic indicator, it’s just something Jim Jubak came up with to illustrate the actual bite of inflation, as opposed to the CPI calculation which takes into account a lot of things that don’t actually directly affect the average consumer. I think another reason I liked this article was that Jim talks about a schmear of cream cheese, which is an entirely foreign concept in the bagel joints I frequent down here in Baltimore. When you order a bagel with cream cheese, it comes with enough cream cheese (based on my tastes anyway) to feed a family of eight. Anyway, the price of a bagel in Jim’s neck of the woods jumped ten cents to $1.95, or a solid 5.4%. – much higher than the official numbers (which don’t actually account for food or fuel).
I’m a fan of food indices like the Big Mac Index because they add a little bit of reality and applicability that are otherwise absent when it comes to cold quantitative facts and figures. Now I need to find a bagel place here that will just give me a schmear.
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I am pretty sure that the CPI (Consumer Price Index) takes both food and oil into account, however, it is the Core price index that removes food and oil from its calculation of inflation because they are considered too volatile.