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Posts tagged with: "CPIFABSL"

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A New Year’s resolution: More homemade food

Food prices for dining out vs. staying home

Here at the FRED Blog we’re continuously looking for self-improvement opportunities, and our New Year’s resolution is to focus on home-cooked foods. Food at home is often fresher and healthier, but it’s also less expensive: The graph above shows that the cost of food away from home has been increasing much faster than the average of all foods. We’ll try to pepper the FRED Blog with healthier and tastier posts all through the year.

How this graph was created: Search for “CPI food,” check the two series, and click “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CPIFABSL, CUSR0000SEFV

What if we priced food in gold?

Imagine paying for food not in dollars, but in gold. How different would the world be? The graph above is an attempt to depict the difference it would make to food prices. Taking the subcategory “food and beverages” in the consumer price index, we compare the price in dollars (in blue) with the price in gold (in red). The graph shows month-to-month percentage price changes. The price in gold is calculated by dividing the price index by the price of gold in dollars.

The graph makes very apparent that, if we priced food in gold, there would be wild fluctuations in those food prices. Consider the units on the vertical axis: Prices change several percent in either direction from one month to the next. But would price fluctuations really be that wild? Probably not, as it’s costly for sellers to change prices (“menu costs”) and they would make those changes less frequently than the graph shows. Yet, the essential premise remains: The Fed has a mandate to keep prices (in dollars) stable, which it can do by managing the money supply. Such stability is not possible with the gold supply. It is thus unavoidable that gold-based prices would fluctuate more.

How this graph was created: Find “consumption price index, food and beverages” and graph it. Add the same series to the graph, then add “gold price,” making sure to check “modify existing series 2.” For series 1, select units “percent change.” For series 2, apply formula “a/b” and transformation “percent change.”

Suggested by Christian Zimmermann

View on FRED, series used in this post: CPIFABSL, GOLDPMGBD228NLBM


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