Students experience more inflation


K-State students are experiencing inflation about three times more than the average U.S. consumer, according to a K-State Economics Club report released today.

The club released its 2007 student price index based on prices observed during the third week of September in Manhattan. The club released the SPI to coincide with the Consumer Price Index, which the U.S. Bureau of Labor Statistics releases on the third Wednesday of each month, said Daniel Kuester, Economics Club adviser and assistant professor of economics.

The most significant increases took place with gas, groceries and tuition, according to the SPI worksheet. Prices are collected at the same locations each year, and the SPI increased 6.3 percent overall from 2006.

While exact figures were not available from the U.S. Bureau of Labor Statistics at press time this morning, Kuester said prices that urban customers pay have increased 2.1 percent, or one-third of the increase that college students in Manhattan experienced since September 2006.

About 20 students compiled the SPI data in categories like gas, groceries, tuition, pitchers of beer, housing, textbooks, pizza and movies.

“We try to mirror the Consumer Price Index to a certain degree,” Kuester said. “We tried to find the products that students are really spending their money on.”

The CPI is a large bundle of goods in the thousands that are measured consistently month to month, Kuester said. It also measures the average change over time in prices that urban customers pay for consumer goods and services, according to the Bureau of Labor Statistics Web site.

The Economics Club has released its annual SPI since 2002. Kuester said the data each year has reflected the effect inflation has on students.

“Some inflation is an indicator that the economy is healthy,” he said, “but really high inflation is a burden on consumers, and it can create some inefficiencies. I think we’re getting a pretty good indicator of how K-Staters are being affected by inflation.”

While the indexes include energy and food prices, the Federal Reserve excludes the two prices in its core inflation. The Federal Reserve excludes the prices in its calculation because they are not responsive to monetary policy and interest rates, Kuester said.

“The Fed is trying to control inflation to a certain degree with monetary policy and changing interest rates,” Kuester said. “Food prices and energy prices tend to be not completely immune but largely based on outside forces that the Fed doesn’t feel like they can control.”

Economics Club President Ed Chesny said the SPI is not as simple as just typing prices into a spreadsheet. Club members conducted research about the prices and weighed the numbers based on a student’s average semester budget of $7,500, Chesny, senior in economics, said.

Several new prices were added to the index this year, including ICAT combo tickets, Internet service, iPods and sorority and fraternity housing costs, Kuester said. He also said the additions will improve next year’s index when 2008 prices are compared to those collected this year.

“One of the problems that is discussed with the Consumer Price Index is that the bundle tends to be pretty stagnant and doesn’t really change,” Kuester said. “We want to reflect student tastes and preferences. We’re just trying to keep up with the times.”

Ben Mooneyham, Economics Club vice president, has worked with the SPI for three years and said it is an interesting and practical project for economics students to apply principles learned in the classroom.

Mooneyham, junior in economics and philosophy, also said students might make possible adjustments to their budgets because of the price increases reflected in the SPI. “The student price index is one generalized way for them to look at how things they spend money on is rising,” he said. “It’s a way to see where their money is going and to be able to make decisions on how to change their budgetary decisions. It’ll be interesting to see if students see this data and whether they decide to make substitution decisions.”