Study pegs Irvine inflation rate at 5.16%

A price index that gauges the cost of living in Irvine shows that housing prices are the biggest culprit in the city’s inflation rate. In March, students in Professor Mark McNeil’s Macro Economics class made a tally of consumables that Irvine residents are likely to purchase, and compared their findings with similar studies from previous years. McNeil created the “Irvine Index” to study and replicate the Consumer Price Index (CPI), which is published by the Bureau of Labor Statistics.

In the study, students estimated the costs of items that affluent consumers in Irvine are likely to purchase: Evian water, an Irvine Sports Club Membership, acrylic fingernails, a Club Med vacation, a Nordstrom charge card, sushi, an audio CD, a Volvo station wagon, a cell phone, and items in six other categories. By computing the monthly costs of purchased goods and services including rent and health care, and comparing them to the same costs in 1990, the base year, students calculated Irvine’s annual inflation rate at 5.16%. They derived the rate of inflation from the index, a statistical summary of costs that they measured this year at 138.50. Last year the index was 131.70.

In 1990, the first year McNeil and his students studied Irvine’s cost of living, consumables like broadband Internet service and mountain bikes did not exist. As the economy evolves,