Joe Biden & the Omelet Price Index

While Joe Biden blathers on about inflation improving, families aren't feeling that. This op-ed is helpful in explaining why the CPI isn't reflecting how families are feeling. The op-ed introduces the Omelet Price Index.

This index is explained "The CPI measures a large basket of consumer goods from airfares to used cars and many things in between. But the CPI does not capture the true impact of inflation on families. To be more accurate, the Bureau of Labor Statistics (BLS), publishers of the CPI, decided to measure 'core inflation' by excluding food and energy prices, which can be more volatile. It was a nice try, but food and energy, such as gasoline, are a large part of the goods purchased by your average family. This explains why the CPI cooling and a trip to the grocery store can elicit different outcomes.

I don't doubt that Core CPI is a useful tool for economists. I don't doubt, though, that it's virtually useless to families trying to figure out their budgets. Core CPI doesn't measure many of a family's essentials. The Omelet Price Index, though, is more precise:

To really measure the impact of inflation on main street, we need to create an alternative price index: the Omelet Price Index (OPI). The OPI is composed of the ingredients to make a three-egg, ham-and-cheese omelet with toast: eggs, ham, American cheese and sliced white bread. (No fancy Gruyère cheese or eight-grain bread in our diner.) The OPI also addresses the shortcomings of the CPI: It is comprised of four staple ingredients that are consistently consumed by families across the country. The recipe for the omelet is three eggs, two slices of ham, two slices of American cheese and two slices of white bread. The OPI was calculated based on that mix.
While that isn't a perfect picture of 'the essentials', it's a pretty nice glimpse into why the various inflation indexes don't capture the pain consumers are experiencing. This is a good explanation of the Omelet Price Index:
What does the OPI tell us? Well, according to the BLS data, the price of eggs (grade A, large, per dozen) is up 150.0% from January 2022 to January 2023. Ham (boneless, excluding canned, per pound) is up 9.7%, American processed cheese (per pound) is up 19.7%, and bread (white) is up 21.4% per pound. So, whipping up that three-egg ham and cheese omelet with a side of toast has increased in price by 49.9% from January 2022 to January 2023.

The BLS basket of goods has risen 6.4% year-to-year, but my favorite breakfast is up almost 50%. Is it any wonder the economy "feels" worse than the official pronouncements tell us?

People are hurting because Biden didn't keep energy prices stable. This is a quick glimpse into how energy impacts the agriculture industry:

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