A recent FRED Blog post showed that individual products provide an incomplete understanding of overall inflation, but sometimes individual products are all you have. For example, before 1913 there was no official CPI (and the CPI wasn’t even seasonally adjusted until 1948). But specific prices from the past do exist. The NBER Macrohistory Database gathers a variety of historical sources, including newspapers, to create data series on prices. The graph shows some of these series. Again, it becomes pretty clear pretty quickly that tracking these individual prices doesn’t allow for a well-defined picture of the evolution of the general price level. You need to compose an index with a broad base of products for that.
The NBER Macrohistory Database does have a few price indexes, including one for wholesale prices that uses the series shown in this graph and one for general prices that is cobbled together from available sources, including wage data. The quality and scope of this slice of economic history certainly don’t match the standards of the current CPI.
How this graph was created: Search for and select the NBER Macrohistory Database, select the tag “price” in the left bar, and choose the various series you want to see. It may require searching more than a screenful to find the series used in this graph.
Suggested by Christian Zimmermann
FRED recently added Internet usage data from the World Bank. The Internet was initially available only to the richest households who could afford both a computer and the connection. It has democratized considerably since, although the poorest still cannot afford it. The Internet was invented in the U.S., so it’s no surprise that its use became widespread in this country before it did elsewhere. The graph shows, however, that other countries have been catching up and even overtaking the U.S. It also shows that China and India are developing rapidly. At some point in the future, the Internet will be like refrigerators and televisions: Everyone will have access to it, except those who purposefully abstain from it.
How this graph was created: Search for “Internet” and the country name to find the series and then add it to the graph.
Suggested by Christian Zimmermann
Most people recognize the CPI (consumer price index) as a common measure of U.S. inflation. But the CPI sometimes seems at odds with the personal experiences of some consumers, who often point out that particular goods have become more expensive than the CPI seems to imply. This incongruity occurs mostly because the CPI is an index that covers many products; the variations in prices are averaged out when forming the aggregate CPI. Case in point: We show here how price fluctuations increase as the range of products narrows. The graph shows the inflation rate for the CPI covering all items (blue line), which is quite stable. But compare this with energy prices (red line), which fluctuate wildly. Narrow down energy prices to just gasoline (green line) and you find even more volatility. CPI data even include particular types of gasoline for particular regions, which display even more volatility (purple line). It is true that the volatility of energy prices is most stark, but similar trends do appear for other categories as well.
How this graph was created: Search for the various series and add them to a graph. Change each series to “Percent Change from Year Ago” and adjust the sample to eliminate the years where only the all-items CPI was available.
Suggested by Christian Zimmermann.
View on FRED, series used in this post: