COVID-19

Does measuring inflation matter during a pandemic?

Kristin Schwab May 12, 2020
Heard on: Marketplace
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A gas station in Los Angeles in March. CPI data shows gas prices fell more than 20% last month. Chris Delmas/AFP via Getty Images
COVID-19

Does measuring inflation matter during a pandemic?

Kristin Schwab May 12, 2020
A gas station in Los Angeles in March. CPI data shows gas prices fell more than 20% last month. Chris Delmas/AFP via Getty Images
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COPY

Every month, the Bureau of Labor Statistics puts out the consumer price index. It’s a number that measures the change in prices consumers are paying for common goods and services. We learned Tuesday it fell by 0.8%, the biggest drop since the Great Recession. But in a pandemic world, what’s the value of measuring inflation when everything seems to be in flux?

The Bureau of Labor Statistics deploys a team of window shoppers every month to check prices of things Americans buy regularly. A loaf of bread, coffee beans and even vodka. And those prices? CPI data show they’ve gone up as we cook more at home because of the pandemic. But then there’s everything else. Take gas, which fell more than 20%.

“This is not surprising given that people aren’t supposed to be out there driving, the airlines aren’t flying, a lot fewer trains are running and so on,” said Kit Baum, a professor of economics at Boston College. Baum said demand for many of the things we buy has gone down, like car insurance and clothing, which are also part of the CPI.

Still, we keep hearing the economy is on pause. So why does any of this even matter? 

“There will be lots of different kinds of data that will give us different pictures of the post-COVID economy, but one of them will be how prices adjust,” said Kathryn Dominguez, a professor of economics at the University of Michigan. Once things pick up again, how much prices change will give us an indication of where the economy is headed. And Dominguez said it’s not just about the shift in prices. The BLS also tracks what people buy.

“It is quite possible that the basket of goods that the average American purchases, even after the lockdowns are all over, differ from what they were before the lockdowns,” she said.

The pandemic could continue to impact what we eat, how we get around and what we buy to entertain ourselves or feel comforted. And that will impact the economy just as much as what all those things cost.

COVID-19 Economy FAQs

It’s still the question on everyone’s minds: What’s going on with extra COVID-19 unemployment benefits?

The $600-a-week payments have ended, officially, as of July 31. For now, there is no additional federal pandemic unemployment assistance. House Democrats want to renew the $600 payments. Senate Republicans have proposed giving the unemployed 70% of their most recent salary by this October, when state unemployment offices have had time to reconfigure their computer systems to do those calculations. Until then, jobless workers would just get another $200. But, nothing has been agreed upon yet.

What’s the latest on evictions?

For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.

Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?

Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.

You can find answers to more questions on unemployment benefits and COVID-19 here.

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