Measuring Inflation with ALICE: A Guide for Everyday Experiences
ALICE, an alternative inflation metric, is revolutionizing how we understand the impact of price movements on financially strained households. In a recent NPR report, hosts Wailin Wong and Adrian Ma shed light on ALICE and its significance in today’s economy.
Who is ALICE?
ALICE, which stands for asset limited, income constrained, employed, represents households that earn more than the federal poverty level but struggle to afford basic necessities. Stephanie Hoopes, the national director of United for ALICE, emphasizes the importance of understanding that inflation measures the change in the cost of goods, not the actual cost.
ALICE vs. CPI
The ALICE Essentials Index differs significantly from the Consumer Price Index (CPI) in terms of the basket of goods and services it considers. While CPI includes a range of expenses, ALICE focuses on essentials like food at home, excluding luxury items. This distinction illuminates why inflation continues to burden struggling families, with the ALICE index consistently surpassing CPI over the past decade.
Impact on Everyday Lives
Nearly 30% of U.S. households fall under the ALICE category, facing challenges in coping with rising prices. These households, limited in savings and earnings, lack the flexibility to navigate periods of increased costs. They often cannot afford to buy in bulk or make necessary adjustments to their spending.
A Human Perspective
Last week, dietitian Bri Kellogg shared her experience working at a food pantry outside Chicago, where she helps clients balance affordability, healthy eating, and lifestyle choices. As the demand for food assistance grows, Bri emphasizes the importance of providing a variety of options, including processed foods, to accommodate clients’ budgets. The food pantry’s provision of fresh meat and produce offers some relief to clients struggling with grocery expenses.
In this evolving economic landscape, ALICE serves as a crucial tool for understanding the true impact of inflation on everyday experiences. By recognizing the challenges faced by financially vulnerable households, we can work towards creating a more equitable and sustainable future for all.
