Former co-blogger Bryan Caplan (how I miss his presence on EconLog) pointed out in April 2020 that the true cost of living in 2020 rose substantially more than the recorded Consumer Price Index stated. The reason is simple: variety fell and it took more time to get a given number of items at stores.

I’ve been experiencing that recently. My wife needs a particular kind of milk to make her morning latte. I used to be able to get her latte at Starbucks but her situation has changed and they don’t use the kind of milk she needs.

The surefire milk is shown in the picture. It’s sold at Safeway and Andronico’s but nowhere else that we can find. And whether it’s there when I go to the store is always a percentage shot. At least 20 percent of the time, I come home without the milk.

I went to Safeway yesterday morning to get some items and they were out of that particular milk. So I went to Andronico’s and found it. The trip to the store and the time in the store took at least an extra 15 minutes, probably more like 20. At any reasonable estimate of my time value, therefore, this milk was extremely expensive.

There’s also an historical point to be made here. Nixon imposed a 90-day price freeze on August 15, 1971. He later relaxed the freeze but kept economy-wide price controls. In 1973 he got rid of many of the price controls. (He didn’t get rid of the price controls on oil and gasoline, an omission that caused huge problems and, arguably led to a new government department, the Department of Energy.) When economists look at various time-series data, few of them note that 1973 was a strange year because of the price controls. With many price controls being eliminated, prices shot up, but the real cost of getting many goods that had been in short supply actually declined or rose modestly. Failure to take account of that can lead you to some seriously wrong conclusions.

Note: For more on how the CPI normally overstates inflation, see Michael J. Boskin, “Consumer Price Indexes,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.