Tuesday’s Links

The shopping cart indicator is kinda of a BS indicator for the price index. The reason is that the price range for a good can vary. Let me explain…Take the Ruffle lights he has in there. Whose to say that Frito-lays or whoever owns them has a bit of purchasing power because they are light. Ie. they charge more because they are light and people who are on a diet(the target of the products) are willing to pay more to eat light chips. Say they go with Doritos next month. That item could be up could be down because they may have more or less purchasing power. See, there is a change in price but it’s not the same item.

Let me give you another example. If they get Coors Light the first time then Miller light next then there is something else affecting the food prices? They arnt comparing apples to apples. Miller light is brewed in WI, if I live in Chicago its cheaper to get that than Coors which is made in Denver. What if I lived in LA. Wouldn’t the price of CL naturally be a bit cheaper than Miller?

One more, What if the Trix were on sale this month and not next month. Then you really have a price increase. Whoops! Price index up 1.50 on Trix increase.

I’m not saying that prices arnt going up its just that it seems a little more complicated than a shopping cart index. There is no causality.

Good idea, poor implementation.