Is the Fed's Inflation Metric Actually Bananas?

Jan 25, 2023
Banana Inflation

According to the Federal Reserve's chart on the cost of bananas, the average cost for all bananas was $0.63 in January 2022, and $0.628 in December 2022. Their claim is that the price of bananas actually went down during 2022.

I can't speak to a lot of things, but I CAN speak to the fact that on January 12, 2022, I bought organic bananas for $0.57/lb, and on January 12, 2023 - exactly 1 year later - they were $0.71/lb - an increase of ~25%. No doubt, this tracks with what many of you have experienced, a lot more closely than the Fed's claim.

What gives?

There are a few possibilities.

1) The Fed is changing the mix of organic and regular bananas over time, comparing apples to oranges.
2) The sample size I collected is small and reflects this particular supermarket increasing their pricing only.
3) The Fed is outright lying.
4) The price of bananas went up 25% in 1 month from December 2022 to January 2023, even though the same supermarket was charging about $0.69/lb in December (this didn't happen).

Here's the problem - if we look at the supermarket pricing as the only actual real measure - the Fed, in this particular case, seems to have even gotten the DIRECTION prices are moving wrong. They are not stupid people. It seems likely that sample size I collected is not representative - or they are straight up lying about the prices.

What do you think?

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