Exactly what is the real inflation rate?

One of our family friends was wondering this question aloud, last evening, and I had to agree that we can't tell. After all, electronic devices and other luxuries have continued to drop in price, automobiles have stayed steady, and the housing market is doing some crazy dance nobody can interpret, but gasoline, sugar, milk, and other necessities have continued to climb. Our chosen example, brand-name sody pop, used to sell at our local supermarket for about $2.75 per 12-pack, back two years ago (Mom would wait for it to go on sale at $2.50). Now, we get all excited if we find that same 12-pack on sale, at 3 for $10 ($3.33-ish per 12-pack). It regularly sells for about $4 per case of 12. That increase sounds like more than 5% per year avg., to me. Another example, an 8-ounce brick of the famous brand of cream cheese, just last year, was priced at $1.29, and as a loss leader, they'd advertise it at $1.09. Today, it is $1.69 (but if you go to one store, they're having a huge special on it -- it's $1.29. Whee.) And, I don't think I need to tell anybody about the cost of petroleum products, or heating fuels, do I?

Now, I'm no math genius or economic guru, myself (although I know at least one), but it seems to me, when the price of necessities goes up, that's a pretty good marker of real inflation. Factoring in the drop in price of electronic toys and novelties seems like something of a cheat, even if some people seem to think that a 64-inch flat-screen digital high-def tv is a must-have item.

When you're on food stamps, this becomes a serious issue: the maximum allowance per month per single person in the state of IL, three years ago, was $139. Last fall, it increased to $145. It has risen, this year, to $150. If the cost of non-restaurant food continues to increase in the same fashion as Coke and Philly cream cheese have, the fixed-income-households are, once again, losing money hand over fist (sorry about the statement of the obvious, here. I'm fully aware that fixed incomes almost always lose ground, and when they gain, it's usually a bad thing for everybody else).

Thank God for "Romulan" (ramen) noodles! They may be all that's left to us, at this rate.