Basket of Goods

How It Works

The concept of a basket of goods is fundamental to measuring inflation and price changes. The BLS CPI basket is designed to represent the spending patterns of the average urban consumer, covering about 200 categories of goods and services weighted by their share of consumer spending. The basket is updated every two years based on Consumer Expenditure Survey data. Burgernomics uses a deliberately simple basket: five ingredients (ground beef, American cheese, white bread/buns, iceberg lettuce, and tomatoes) in fixed quantities matching a standard cheeseburger recipe. This simplicity is a feature, not a bug, it makes the index transparent, reproducible, and easy to understand. More complex food price indices exist: the USDA tracks a "Thrifty Food Plan" basket (the basis for SNAP benefits) containing hundreds of items, and the BLS food-at-home CPI tracks about 70 individual food items. The advantage of a simple basket is that it isolates price changes without the noise of shifting consumption patterns. The disadvantage is that it may not represent what people actually spend on food. Burgernomics embraces this tradeoff, it is not meant to measure overall food affordability but rather to track one specific, iconic meal.

Related Terms

• Consumer Price Index (CPI), A measure of the average change in prices paid by urban consumers for a fixed basket of goods and services, published monthly by the Bureau of Labor Statistics.
• Substitution Effect, The tendency of consumers to switch from a product that has become more expensive to a cheaper alternative that serves a similar purpose.
• BLS Average Price Data, A BLS program that reports actual dollar prices (not index values) for approximately 70 food items at the national and regional level, published monthly, the primary data source for the Burgernomics.