Time to start counting food, gas costs?
Patricia Russell and Ralph Ashley compare prices while shopping for groceries at Lorenzo's Supermarket in North Miami, Fla.
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KAI RYSSDAL: Just to review before we start our discussion of inflation: There are two ways to measure it. You could add up everything consumers buy -- food, gas, new couches, tiddly winks, everything -- and then measure that. That's the overall number. Or, you could strip out the food and the gas -- because traditionally they've been what's known as volatile -- they change a lot. Then you're left with the core rate. Which, the theory goes, gives you a more honest picture of what's actually happening with prices.
Now that you've got that straight, here are the day's numbers. Overall consumer prices -- that's gas and food along with your tiddly winks -- shot up 0.6 percent last month, the biggest one-month increase since November. The core rate rose only 0.2 percent. So by that measurement things really aren't that bad.
But with food and energy doing a steady rise some economists say it's time to stop ignoring them. From Washington, Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: The core rate of inflation isolates prices the Federal Reserve can control. If the Fed raises interest rates, its harder to borrow money for that new convertible you covet. Demand and prices go down. But Wachovia Senior Economist Mark Vitner says interest rates have no effect on essentials.
MARK VITNER: Ben Bernanke could raise interest rates a dozen times and it's not going to impress the sheiks. He could have them over for dinner. We're not likely to get any lower oil prices because of that.
Kelly Cunningham is an economist with the San Diego Institute for Policy Research. He says food and energy prices also stripped out because they are volatile. But now those costs are rising steadily.
KELLY CUNNINGHAM: Market events are not allowing it to go down now that we see China and Third World countries that are entering into the marketplace for oil.
That steady demand has led Fed economists in Dallas and Cleveland to use a new core inflation gauge. It includes food and energy prices, unless they start swinging wildly. As for consumers, they're just hurting -- so much that they're singing about inflation on YouTube.
YOUTUBE VIDEO: Inflation, ba-bay-tion you're going to be my deflation. Oh, baby, baby.
Richard Yamarone is chief economist of Argus Research. He says the Fed is starting to unofficially use the new core inflation gauge. But there is one way for the Fed to formally acknowledge consumer pain -- include a footnote in the core inflation report.
RICHARD YAMARONE: I think they might even adopt some asterisk saying this is something really important here because it's influencing everything.
In Washington, I'm Nancy Marshall Genzer for Marketplace.