Calculating food and gas prices in consumers' attitudes

The Core Consumer Price Index tracks all kinds of spending except on food and gas, even though those prices help indicate consumers' choices and attitudes.

Jeremy Hobson: Today, we find out how consumer prices changed last month. Economists watch the Consumer Price Index for signs of inflation. So far this year, things have stayed pretty steady though there have been a couple of big exceptions.

Marketplace's Stacey Vanek Smith reports from New York.


Stacey Vanek Smith: The Core Consumer Price Index tracks the cost of Kindle readers, Santa sweaters, your plane ticket home for the holidays -- pretty much everything you buy. Except gas and food -- they're considered too volatile to count. Food prices have jumped about 5 percent this year; oil prices are up more than 30 percent since October.

Stephen Schork: That's the biggest joke with these inflation numbers, because it excludes food and energy.

Oil analyst Stephen Schork says high gas prices really affect the economy.

Schork: We know that consumers really begin to pull back on driving and alter their behavior.

And consumers' attitudes. Chris Christopher, an economist with IHS Global Insight.

Chris Christopher: When gas prices go up or when food prices go up, people get very upset.

And when shoppers are upset, they don't spend. Christopher says it's very important for the economy that food and gas prices ease in 2012.

Christopher: When consumers lighten up a bit, maybe businesses will start hiring more. And when businesses start hiring more, then consumers will start spending more.

And, Christopher says, that could be the start to a real economic recovery.

I'm Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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