Evening star., 1948-06-07


awkward name for the Nations top measur-
ing rod Of the current high cost Of living The
index has new importance today because OF
It's part in the new General Motors contract
with the CLOS United Auto Workers Union
Because Of the use Of this index, the product
OF the Labor Departments Bureau Of Labor
Statistics, thus has come to play : growing
part In Acknowledgement relations, II Is
worthy Of . detailed examination.
First Of all, tho index is not . measure Of
changes In living costs. Such changes include
both price changes and changes in the quanti-
for which We pay.
If your family switched from ham to beet
or from streetcars to private car. there's an In
crease in your cost of living but not in the
consumers price index
The consumers index, then, is designed to
measure the changes from time to time In
prices paid by consumers for goods and services
they commonly use, and for nothing else,
Further, 1t Is an index Of prices for the items
paid for by moderate income family in the
Nations large cities, not those paid for by
every family in the United States or even by
every urban family.
Base Figure Explained.
The goods and services priced were deter
mined by investigating the expenditures, back
in 1934-36, Of families whose income averaged
1884 In those lower priced years. The con-
sumers' index tells you today what 1t costs
such an average" family to buy the same
things today
To obtain base" figure OF 100 for the
index. these goods and services in the prewar
years 1858 were priced and the result was
arbitrarily assigned the figure 100. From this
base" all subsequent increases are figured.
. The latest figure is 1898 for April Is of
this year. In other words, for every 500 it took
back in those prewar days. 1t takes s1e9 80
today to buy the same things
What are these things the changing cost
Of which the consumers index attempts to
measure?
They represent all the family living essen
tials-food, apparel rent, fuel, utilities, house
furnishings, and miscellaneous goods and serv
ices such as medical care, personal care, trans
portation, laundry service and recreation. Fed
eral, State and local income taxes are not
included in the index-they probably should be
but sales taxes are included In the price Of
goods sold.
Varied Reference List.
The list includes 40 foods from bread and
milk to veal steak. It includes SO articles Of
clothing, 10 fuels, 23 kinds Of house furnish
ings 40 miscellaneous goods and services such
as automobiles, trolley fares movie tickets and
the cost Of cutting your hair and filling your
teeth. Finally there Is rent, checked quarterly
In each of "a cities. Food prices are checked
In Sc cities at 1850 Independent stores and
AIS chains, representing some $500 individual
stores
But even when you have all these prices,
you can't just add one to another. They must
be, as the statisticians say, assigned relative
Importance"
This is done in accordance with what the
Bureau of Labor Statistics figures the average
moderate income family in large city buys
not what people should buy from nutritionai
or even sensible budgetary standpoint but for
the things for which people actually spend
their dollars.
As . result in the words Of BIS Commits
sioner Evan Clague, whether the Cpl goes
up or down depends on what happens in
food"
OF course, rents and higher streetcar fares
and other things also affect the index but tho
big jumps have been caused by the rising price
tags on the food items in the market basket,
But, In estimating last week what Is likely to
happen to the index in the coming months.
Mr.. Clague said: "our index will probably 60
the way food goes"
Back when the base period was established,
food represented 354 per cent of the consum-
ers' price index. Today it represents AZ per
cent. This is a shift in the relative import
ance" Of food in the index.
OF all the food items meats, fish and poultry
originally represented 10 of the 1854 per cent.
Today they represent 127 Of the Az per cent.
Dairy products have gone up from SO per cent
Of the total index to 81 per cent
Taking individual items, one pound Of pork
chops-not just any pork chops, but center cut
chops cut from number one grade pork loins Of
between 10 and is pounds-now represents is
per cent Of the total consumers price index.
Relative Cost Of Clothes.
BY contrast, q woman's cotton street dress
represents $40 Of per cent and a mans
white broadcloth business shirt Nationally
advertised, sanforized shrunk) represents "
OF per cent,
bed mattress represents only 1/1o Of
per cent, not because q mattress Is cheap but
because the family buys new mattress only
once every five or ten years while most families
buy several shirts and dresses each year.
Cigarettes represent 1.6 per cent of the total
and toothpaste 2/10 Of per cent, to quote
two smaller but necessary items
Rent today represents IA per cent Of the
index. If rents continue to creep up this
figure, Of course, will rise, for people must pay
rents.
From all this detail 1t can be seen that the
Labor Department has developed thorough
measuring stick Of the shift in what 1t costs
the moderate-income family to pay for the
same things over period Of months or years.
The items priced for index have been
changed from time to time to meet shifts In
family purchasing habits. During the war
autos and other nonexistent items normally
included were dropped. During periods Of
beef shortages the relative Importance" Of
beef declined and that for chickens went up
because people switched from one to the other.
An independent report on the, BIS index,
made some years ago. concluded that the index
measures "the aggregate cost Of fixed typical
rlyo hoc k>f hat