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Consumer Price Index Reports Unexpected Inflation Rise

The Consumer Price Index, the Labor Department's yardstick of inflation, indicated greater inflation in January than had been anticipated. Paul Solman discusses how the CPI determines inflation and the meaning of this new report.

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  • JIM LEHRER:

    Now, tracking inflation and its connection to politics. The government reported today that prices rose again in January, as measured by the consumer price index. It was a higher increase than economists had expected.

    Our economics correspondent, Paul Solman, tagged along to see how the government calculates those numbers. And here is his report.

  • PAUL SOLMAN, NewsHour Economics Correspondent:

    A rendezvous in Anaheim, Calif., with one of some 400 part-time data collectors of the CPI, the consumer price index, our most popular gauge of inflation.

  • FRANK DUBICH, CPI Data Collector:

    How are you, sir?

  • PAUL SOLMAN:

    Very nice to meet you.

    Sixty-one-year-old Frank Dubich retired after 20 years with the port of L.A. For the past few, he's been a government scout of sorts, tracking the CPI.

    And this is your government-issued computer right here?

  • FRANK DUBICH:

    That's correct. That's called a tablet computer. And what we do is, when we collect the price information, I'll go home, and then send it wireless to Washington, D.C. Then I have to put a password in. I can't show it to you.

  • PAUL SOLMAN:

    You can't show me your password?

  • FRANK DUBICH:

    No, no.

  • PAUL SOLMAN:

    No, that wouldn't make sense.

    All sources for the CPI, some 25,000 nationwide, are strictly confidential, as well, so every stop on our tour must remain titillatingly anonymous, no matter how mundane. Suffice it to say this one sells pucks.

  • FRANK DUBICH:

    Now, I'm looking for the UPC number 802…

  • PAUL SOLMAN:

    To say Frank gets down to specifics is gross understatement. And while he tracks just a few of the 80,000 items that make up the CPI, there seem to be that many varieties of skating shin guards alone, not to mention hockey gloves.

  • FRANK DUBICH:

    And how much are those today?

  • STORE WORKER:

    These are $69.99.

  • FRANK DUBICH:

    OK, they were on sale in January?

  • STORE WORKER:

    They were on sale back in January for $50 bucks.

  • PAUL SOLMAN:

    Though these gloves were on sale last month, the price rise is duly recorded. Short-run sales tend to average out over time. But the glove price rise is consistent with the latest trend: Long-run inflation has been on the rise.

    RICHARD HOLDEN, Bureau of Labor Statistics: … 4 percent over the past year.

  • PAUL SOLMAN:

    Richard Holden of the BLS, the Bureau of Labor Statistics, which runs the CPI operation and issues the monthly number.

  • RICHARD HOLDEN:

    And then you'll also see a different index for all items, less energy and food. And that's less, because it takes into account the volatility of those two particular things. For the past year, I believe it's 2.7 percent.

  • PAUL SOLMAN:

    When you subtract energy and food price swings, that is, and get down to the more stable inflation rate.

  • RICHARD HOLDEN:

    That's what people refer to as core inflation or underlying inflation.