Government Sleuths Track Inflation Random Price Checks By Hundreds Of Scouts Used To Compile Cpi

Anne Palmadesso didn’t expect the department store to have little girls’ bikinis in January, but her sharp shopper’s eye spotted a rack of tiny suits in hot pink and neon colors.

Not that she wanted to buy one.

The government scout was shopping for prices.

Palmadesso, 55, and more than 300 other pricing agents collect prices on 90,000 items each month to track inflation for the Bureau of Labor Statistics.

Hauling hundreds of yellow pricing sheets clipped in three-ring binders, the Virginia woman logs 200 to 300 miles a week popping in at stores, gas stations, doctor’s offices, restaurants seeking out prices on goods from pants and cars to mouth retainers and rebuilt alternators.

The end result is the Consumer Price Index, or CPI, for 84 years the government’s closely watched inflation gauge.

The CPI is under attack from some economists who say the index overstates inflation by about 1.1 percentage points a year.

That small number translates into big money: The CPI is used to adjust government benefits such as Social Security checks and food stamps for nearly 70 million Americans.

By one estimate, the government could save $1 trillion over 12 years by adjusting it. A Senate committee is exploring whether the CPI formula should be changed.

For now, nobody can agree on how much the CPI exaggerates inflation.

It’s not an exact science, Palmadesso admits.

Her pricing sheet told her to look for a swimsuit made of at least 50 percent nylon and up to 49 percent spandex. The suit was to have a partial lining and bear the U.S.A. Olympic logo.

“We’re not going to find that anymore so we’ll have to go with something else,” she said as she cruised the store to the accompaniment of Muzak.

Cradling her bulky blue binder in one arm, Palmadesso flipped through swimsuits for close to 15 minutes, checking fiber content.

A pink-and-green “Mickey Loves Minnie” suit looked right, but had only 6 percent spandex. Finally, a blue ruffled suit fit the bill.

“Does it have a partial lining? Oh, please, have a partial lining,” Palmadesso pleaded, peering inside the suit. “Yes, it does - in the crotch.”

Palmadesso recorded the price - $10.99 - and raced out of the suburban Washington mall to get to an orthodontist’s office. Among other things, she had to find out how much patients with retainers pay for checkups.

“It’s going to be a while. I’m with a patient,” an irritated office manager told her. “I thought you were going to come at 10:30.”

Palmadesso decided it would be best to come back later.

Once obtained, the price will be included in the bundles of yellow sheets Palmadesso continually sends to Washington.

Each month, the information from Palmadesso and other price checkers around the country is punched into computers. Commodity analysts review the data with a special eye for large price fluctuations. Sales tax is added. The data is aggregated and compared with earlier information. And then the monthly CPI is released.

Look for January’s index, bikini prices and all, to be announced on Feb. 19.

Despite the monthly ritual, many Americans have never heard of the CPI.

Palmadesso had clearance from a department store’s headquarters to check prices, but when she arrived, a receptionist insisted she talk to the manager.

“We’re just tracking inflation,” Palmadesso explained.

“Oh, I never knew,” the manager replied.

Palmadesso had to explain her job again to a clerk in the same store, then again at a fast-food restaurant where she found that two menus had different prices for the same chicken sandwich. New menus had been misprinted, the manager explained, and the lower prices remained in effect.

The day’s last stop: a service station.

“You want to know about a minivan this time?” the manager volunteered.

“The same thing,” Palmadesso said. “The price of an alternator. Standard, 90 amps. For a 1991 Chrysler Caravan. Three liter.”

The manager grabbed a phone with a grubby hand and called his parts supplier. Palmadesso tallied the price: $190.40 for the rebuilt alternator, $56.50 for labor and $12.35 for the shop charge.

“They haven’t changed their prices,” he said.

“Not a penny,” she replied, and snapped another price sheet into her binder to send to Washington.