Published May 1978 — Download PDF of the original newspaper column
Byrd's-Eye View By U.S. Senator Robert C. Byrd Measuring Inflation If you got a raise this year, how much would it really be worth? If you are retired, and living on a pension, will your benefits be adequate to cover higher prices? If you are making an investment, is your return going to be fair? The answer to all these questions lies in the rate of inflation. Although that rate decreased last year, it is still one of our major problems. It is essential to correctly measure this increase in the dollar cost of things we buy, in order to better understand and control our economy. The most important measure of inflation is the monthly Consumer Price Index, which is compiled in the Bureau of Labor Statistics. This report compares what a "market basket" of goods and services cost this month, as compared to what the same items would have cost last month, last year, or in the base year, 1967. Thus, if the CPI is 186, as it was in December, the cost of the "market basket" was $186 for the same items which cost $100 in 1967. The "market basket" items which are used in this survey reflect the purchases of the average urban worker and clerical worker-about 40 percent of the total population. Items measured run the gamut from bread and butter to television and bowling fees, from pediatric health care to funeral services, from tricycles to college tuition. Periodically, the goods and services measured are reevaluated, so that the CPI will accurately show changes in the spending habits of families. The relative importance of each item in the "market basket" may change, reflecting changes in how people allocate their income. For instance, 35 percent of the average worker's income was spent on food in the years 1935 to 1939. However, in 1977, food took only 24 percent of that income, and the latest revision shows that food accounts for only 19 percent of the urban worker's purchases. Beginning with the index published in February of this year, the Bureau is publishing a new, revised workers' index, based on an updated "market basket" and a more detailed survey. In addition, the Bureau has created a new index, reflecting the purchases made by a broader segment of the population. This new "All Urban Households" index includes spending by the retired citizen the unemployed, the self-employed, salaried professionals, and urban and clerical workers, about 80 percent of our population. The revised CPI and the new all-urban CPI will give us a much more accurate yardstick to measure inflation, and a better set of tools to work with in planning our attack on our old enemy, inflation. May 17, 1978