Fact Finders: What’s the true dollar impact of inflation on your wallet?
Viewer: Is that $717 a month a realistic number?
SPRINGFIELD, Mo. (KY3) - We’re closing in on the mid-term election on November 8th. So, you’re seeing several political ads on TV. This one (see video) is called Grill Dad from Eric Schmitt for Senate. It says inflation is costing Missourians $717 each month. Our viewer Kim wants to know; Is $717 a month a realistic number?
There’s no doubt inflation is up this year. The latest Bureau of Labor Statistics report says inflation rose four-tenths of a percent in September. For all items, BLS reports inflation rose 8.2% in the last 12 months.
The government agency uses a market basket of goods to calculate these numbers. We asked the Schmitt campaign for the ad’s source of the $717 number. They sent us to the JEC Republicans State Inflation Tracker.
One of the Republican researchers told me the number is calculated based on the average household size in Missouri of 2.3 people. The researcher says the market basket they used includes the categories of shelter, food, gasoline, and other items.
Democrats on the Joint Economic Committee are critical of the numbers, “The Republican estimate claims to be far more precise than it can be based on the underlying data it uses,” says the Communications Director for JEC Democrats Erica Handloff. “We know households in every state are feeling the burden of higher prices, but this relies on a series of big leaps and disparate data sources to attempt to extrapolate a precise dollar amount in each state. Driven more by assumptions than by data—since inflation data aren’t even collected for every state—the Republican estimate mixes different levels of geography and definitions of household consumption. Rather than exploiting household economic pain for political gain, Republicans could work with us to cut costs and drive more inclusive growth.”
Meantime, The Census Bureau mentions, when evaluating a price index, it’s hard to know how households adjust consumption when prices change.
“That’s one of the interesting things about these price indices,” explained David Mitchell, a professor of economics at Missouri State University. “If you have a price index that includes things like meat, but you’re a vegetarian, then it doesn’t matter if the price of meat goes up 20%. It will not have the same impact on you as it would on somebody else.”
“It’s relative to this. Are we talking about a single-person family or someone with five people in their family?” says “Brad Pistole of Trinity Insurance & Financial Services. “That’s, that’s the big thing to weigh right there. Because if you’ve got one vehicle, and you’re one person or two people, maybe a married couple with no children, then it’s not going to impact you as much as it is if there are five people in your family with three teenagers and you have four vehicles.”
Pistole says with grocery prices rising, families are adjusting their spending habits. You may buy bulk or off-brand items to cut back on the grocery bill. If you’re paying rent, inflation may hit you harder than someone locked into a fixed mortgage.
The Bureau of Labor Statistics does have an inflation tracker on its website. You can punch in a number. You spend $250 during each trip to the grocery store. If you punch in 250 and compare last September to this September, you’re paying $20.50 more for the same goods as you were a year ago.
Coming back to the viewer’s question, Is that $717 a month a realistic number? As you heard, any index like that doesn’t address how you change your spending habits because of inflation. This one we’ll rate incomplete for the reasons we’ve explained.
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