U.S. Consumer Prices Rose 10.1 Percent During the First Half of 2020, According to Chapwood Index
US Consumer Price Increase, According to Chapwood Index, Outpaces CPI in 1st Half of 2020
The Core US CPI significantly underestimates inflation by excluding energy and food costs.. People who depend on the CPI to guide their raises are falling farther and farther behind.”
DALLAS, TEXAS, USA, August 24, 2020 /EINPresswire.com/ -- U.S. Consumer Prices Rose 10.1 Percent During the First Half of 2020, According to Chapwood Index— Ed Butowsky
State and local taxes were key drivers
U.S. consumer prices rose 10.1 percent on an annualized basis in the first half of 2020, according to the Chapwood Index. The Index, which serves as an alternative to CPI, looks at price trends in the top 50 U.S. cities. Unlike the core U.S. Consumer Price Index, the Chapwood Index includes the cost of energy and food.
By contrast, according to the U.S. Bureau of Labor Statistics, the CPI in July was up just .99 percent year-over-year.
According to the Chapwood Index, the top first-half increase was in Sacramento, California, which saw prices rise 13.4 percent over the same period last year. The smallest increase was in Albuquerque, New Mexico, which saw prices rise 7.1 percent from a year ago.
Even with the pandemic and the economic issues it has raised, price increases were driven primarily by state and local taxes.
“Economic uncertainty has been building, but taxes were the main culprit,” said Chapwood Investments Managing Partner Ed Butowsky, who designed the Chapwood Index in 2007.
Butowsky criticized the CPI as being a poor predictor of inflation. “The core CPI excludes food, clothing and energy because the prices are too volatile. That makes me question what the CPI is really measuring. Those are primary areas of spending.”
Butowsky also questioned why the CPI is used to determine cost-of-living increases for Social Security recipients. “If you look at real price increases, it is clear that Social Security recipients are falling farther and farther behind.”
An example of real cost of living increases, as indicated by the Chapwood Index, would be the impact on a New Yorker making $90,000 a year. That person would have to make an additional $2,430 this year just to keep pace with prices.
Looking at five years, the Chapwood Index found overall consumer prices jumped 9.9 percent per year. A number of California cities, Oakland, San Francisco, Sacramento and San Jose, came in at numbers at or approaching 13 percent per year.
“The Bureau of Labor Statistics would have you believe that the five-year number was 1.7 percent per year. Any thinking person knows that is not accurate,” said Butowsky. “You can’t substitute in the price of hamburger if you think the price of steak is too expensive. Unfortunately, that’s how the CPI works.”
Index Methodology:
The Chapwood Index is calculated on the city-by-city basis because price increases vary greatly by city. A full table of cities is included at the end of this release and published on chapwoodindex.com.
In creating the Chapwood Index, Chapwood's research team compiled a list of over 4,000 products and services that consumers across the country spend money on in their daily lives. That list was narrowed down to the top 500 items that were used most frequently.
Examples of items included in the Index: Starbucks coffee, Advil, gasoline, taxes, tolls, fast food restaurants, computer paper, toothpaste, oil changes, car washes, pizza, Internet service, Gymboree lessons, mobile phone service, cable TV, dry cleaning, movie tickets, hairspray, gym memberships, home repairs, piano lessons, laundry detergent, light bulbs, school supplies, parking meters, pet food, underwear and People magazine.
Fluctuations in the true price for each of those items are carefully tracked and monitored, without any manipulation or biases, quarter-by-quarter and city-by-city, creating a weighted index based on price.
ABOUT CHAPWOOD INVESTMENTS
For more than 25 years, Ed Butowsky and the Chapwood Investments team have helped high net-worth clients by bringing clarity and understanding to their portfolios by targeting specific rates of return to meet their long-term needs. The firm is based in Plano, Texas just outside of Dallas.
For more information on the Chapwood Index, please contact: Ed Butowsky (972) 897-0197 ed@chapwoodinvestments.com www.edbutowsky.com
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Ed Butowsky
chapwood investments, llc
+1 972-897-0197
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