The Hanson Index is back for its 37th year, our annual attempt to humanize inflation and track prices for goods and services in the Vermont economy — like for a Big Daddy and coffee at Handy’s Lunch (thanks, Earl) and a Vermont fishing license. With inflation heating up, this is a good time to see how items in the Hanson Index stack up.
But first there are some housekeeping issues. During the first 35 years of the Index, we made no changes to the 23 components. This allowed for an apples to apples comparison year to year. But things change over time. It got more and more difficult to price a no-fault divorce (is this an oxymoron anyway?) or a BMW tune-up (grease monkeys out, technology in), and this year we dropped the Burlington-to-Boston direct air flight, which was important three decades ago, but no longer exists. Faster to drive than to transfer once or twice by air.
We are also adding six prices this year which give us broader exposure to food (Cabot Cheese and maple syrup), drinks (craft beer), goods (LL Bean’s Duck boots), commodities (lumber), and services (an Uber ride). We can’t guarantee our price list will stay relevant for another 35 years, but for now we will stay confident and not worry about what we cannot control.
For much of the past ten years, inflation has slumbered in the 2%-3% range. More recently it has jumped, topping 9% in June 2022. It has come down a bit today to the 5%-6% range, but it is still uncomfortably high. We started the Hanson Index back in 1986 to see if local prices went up more, less, or about the same as the national Consumer Price Index (CPI). Over the long term our local prices have gone up almost 50% faster than the CPI. Our methodology is certainly not scientific or exhaustive, but the price increases still are real, and painful.
Even with the addition of six new prices this year, the Hanson Index fails to capture some significant expensive sectors of the economy which cause big holes in our budget. We are thinking of healthcare and education in particular. Productivity has increased dramatically in many “goods” over the years. You can buy a much better TV today than 30 years ago at roughly the same price. But when people are the main “product,” like with healthcare, education, and of course our leading price culprit, babysitting, prices have skyrocketed.
The Hanson Index won’t answer all your questions about inflation, but we hope it is a fun exercise and a look back at what the world and our wallets were dealing with decades ago.