Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 26, 1993 TAG: 9301260143
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: DAVID RESS KNIGHT-RIDDER/TRIBUNE
DATELINE: LENGTH: Medium
NUISANCE INFLATION: THIS KIND PINCHES
DOWN-HOME INFLATION, says a Tidewater economist, is a different ballgame from the one cooked up by the numbers-crunchers in their ivory towers. Economists aren't like the rest of us.Run down to the corner store for a six pack, or to the doctor's to see about that cold that just can't be shook, and most of us are content to gripe about the bill.
But for Marshall Booker, an economics professor at Christopher Newport University in Newport News, it's all fodder for analysis.
Saying "ouch" after shelling out more than he expected for coffee, gasoline or antacid has made Booker think there's more to inflation than the Consumer Price Index, the measurement federal statisticians use.
It bothered him to keep paying more and more for his kids' clothes, takeout food or electricity. And don't even talk about doctors' bills.
In fact, it was so annoying that Booker decided to take a look at what actually happens to those prices.
And, he says, the price rises that really make folks grind their teeth tend to be larger than the inflation rate measured by the Consumer Price Index or the GDP Deflator Index, a more abstract measure designed to look at prices of all kinds of goods and services, not just those consumers buy.
Booker has taken all those teeth-gnashing price increases and come up with an inflation index of his own. He calls it the Local Nuisance Index.
It increased 7.8 percent last year, rising at more than twice the 3.4 percent increase in the consumer price index. That's been the pattern since Booker started the index in 1989.
One big reason is the price of health care. The cost of a visit to the doctor rose about 28 percent last year, according to friends, neighbors and students Booker talks to. Getting a filling or buying a bottle of antacid have had much the same kind of impact.
Solace, alas, can also come dear. Prices of ground coffee, takeout food, cigarettes, beer, sports events and chewing gum are up.
It's even tough to put a nice face on things - the cost of dry-cleaning a suit, laundering a shirt and getting a haircut - a trim, not a scalping - also helped the Nuisance Index climb last year.
And you can't run away; the Nuisance Index also tracks gas prices. It also measures such essentials as rent, electricity, eggs, milk, toilet paper, paperbacks and newspapers.
There's a serious point in this, and maybe something the new economic policy makers in Washington ought to keep in mind: There is no one measure of inflation.
The rise in Booker's Nuisance Index would be different if he sampled prices somewhere other than Tidewater. The prices he uses include sales taxes, gas, alcohol and cigarette taxes, all of which vary from state to state. The price ofa ticket to watch the Tides, Norfolk's baseball team, probably doesn't track NewYork Mets prices.
Many of the things on his list are goods that people buy fairly often, so that a month-to-month rise is fairly noticeable. Some of them are things people really can't do without, such as rent or dental fillings.
All are things people think of when they think prices are rising too fast.
Irvin Kellner, chief economist at the old Manufacturers Hanover Bank, made the point back in the late 1980s. Consumers, he said, have the feeling there's more inflation than the government says there is.
Which is right, then?
Booker likes his Nuisance Index because it takes account of at least some of the taxes people pay. But the Consumer Price Index looks at more than 10 times as many commodities.
Perhaps the real point for the new Clinton administration is that setting a particular target rate for inflation may not be quite as important to voters as making sure the general trend is heading in the direction it should.