Thursday, August 12, 2010

My, how prices have changed since 1942---Or have they?? See for yourself...

I saw this particular photo HERE.  It (and several other photos) is colorized supposedly to show that scenes from The Depression are not much different from today.  I am not sure about that, BUT this particular one of a store with fruit and vegetables in front of it caught my eye.  Specifically, the prices of things.  Got me to thinkin'...Factoring in inflation over time, what has happened to the prices of common commodities that we all purchase from time to time...

Item                          1942 Price              2010 Price    Inflation Adjusted Price
Oranges                       1 cent (ea)              75 cents (ea)                  13 cents
Grapefruit                    5 cents (ea)             25 cents (ea)                   67 cents
Apples                        25 cents for 4 lbs    $4.72 for 4 lbs                   $3.35
Potatoes                     19 cents for 5lbs     $2.31 for 5 lbs                   $2.54

(Note: I adjusted potatoes weight to match 5 lbs and used current russet potato price---not sure of the potato type in 1942)

How to read this:
(1) An orange cost 1 cent in 1942. If the price of oranges only increased as much as inflation increased from then to now, the price of an orange SHOULD be 13 cents  BUT it is 75 cents. Orange prices increase significantly more than inflation.
(2) A grapefruit cost 5 cents in 1942. With inflation it should cost 67 cents, BUT it only cost 25 cents! What a deal on Grapefruit!
Using the same methodology, you can see Apples have increased faster than inflation but potatoes a little less than inflation. 

This is not a perfect analysis of the changes in prices overtime. There are many variables that could affect prices of particular goods.  BUT it is interesting! (C'mon, you gotta admit it...)

I used current pricing data from HERE and use the BLS inflation calculator HERE
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