The Washington herald., 1921-03-13

change Of food prices. The Depart
ment of Labor also publishes a
monthly index of wholesale food
prices. 1t Is OF considerable interesI
TO compare the retan and wholesale
index numbers on food prices. In
the accompanying diagram there is
shown the monthly change in these
two food price indexes since the be-
ginning of 1917. The commodities
quoted on in the retail index are not
Identical in all cases with those
used to form the wholesale index.
However, careful Investigation. has
shown that where even identical
con,modities are used. there is prac-
tically no difference in the relation
of the two lines.
It will be noted that throughout
the whole period under discussion,
with the exception of the last two
months, the retail index lies well
below the wholesale index. Both
lines are calculated on a base where
100 equals the average price in 1913.
1t Is clear that wholesale food prices
have shown a much greater percent
age increase than have retail prices
for similar commodities. In Janu-
airy, 1917, wholesale prices had in
creased approximately SO per cent
over the average for 1913. Retail
prices, on the other hand, were only
2S per cent greater than they were
In the year before the war.
1t is generally assumed that retail
prices show a lag behind Wholesale
prices. but that ultimately they
reach the same level. On the
basis of these two curves this
is shown not to have been the
the case for food prices. For ex-
ample, in May, 1917. the wholesale
above the 1918 average. 1t was not
reached this same level. Obviously
the lag of two years in the advance
| OF retail prices is not to be con.
sidered seriously. Furthermore. the
| curves show that every significant
rise or fall in wholesale food price.
has been reflected Immediately in 9
corresponding movement in the re
tail price line. For example. in the
middle of 1917. in the spring of 191,
and again in February, 1919. Their
| were marked drops in the whole.
| sale price index, every one of which
| was accompanied by a correspond
ing movement in the retail index.
| The explanation of the persisten
lower level of the retail index com
pared to. the wholesale curve is du,
| to the fact that retail food dealer
did not advance their prices in tn
same percentage relation as di,
wholesale dealers. Wholesale foot
prices in May, 1920, advanced to |
point 1Sf per cent above the 1s1;
level. Retail prices. on the othe
hand, never reached a point NOR,
than 12l per cent above the pre-wa
level. Obviously, retail dealers wer,
satisfied with smaller increase II
gross profit than were the whole
sale dealers. Possibly this ma.
have been due to a smaller increas
in the cost Of doing business.
Since the middle of 1920 foo,
prices, both wholesale and retail
have declined rapidly, but wholesal
prices have descended at a mucl
faster rate than retail prices. As -;
dex line is now below the retail in
dex. This Is the first time this ha
happened since the beginning of tn
war. The January wholesale foo
index amounted to 1s2. while the re
tail index for the same month wa
l177. Inasmuch as the retail dealer
did not advance their prices a
rapidly as the wholesalers durinl
the war, some leniency Is due then
at the present time in their dis
inclination to reduce prices as fas
las the wholesalers, s