The Burrito Index: Consumer Prices Have Soared 160% Since 2001

Tyler Durden's picture

Submitted by Charles Hugh-Smith via,

In our household, we measure inflation with the "Burrito Index": How much has the cost of a regular burrito at our favorite taco truck gone up?

Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the real-world inflation of the Burrito Index with great accuracy: the cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.

That’s a $160% increase since 2001; 15 years in which the official inflation rate reports that what $1 bought in 2001 can supposedly be bought with $1.35 today.

If the Burrito Index had tracked official inflation, the burrito at our truck should cost $3.38—up only 35% from 2001. Compare that to today's actual cost of $6.50—almost double what it “should cost” according to official inflation calculations.

Since 2001, the real-world burrito index is 4.5 times greater than the official rate of inflation—not a trivial difference.

Between 2010 and now, the Burrito Index has logged a 30% increase, more than triple the officially registered 10% drop in purchasing power over the same time.

Those interested can check the official inflation rate (going back to 1913) with the BLS Inflation calculator by clicking here.

My Burrito Index is a rough-and-ready index of real-world inflation. To insure its measure isn’t an outlying aberration, we also need to track the real-world costs of big-ticket items such as college tuition and healthcare insurance, as well as local government-provided services. When we do, we observe results of similar magnitude.

The takeaway? Our money is losing its purchasing power much faster than the government would like us to believe.

Comparing Burritos to Burritos: A Staggering Divergence of Reality and Official Inflation

According to official statistics, inflation has reduced the purchasing power of the dollar by a mere 6% since 2011: barely above 1% a year. We’ve supposedly seen our purchasing power decline by 27% in the 12 years since 2004—an average rate of 2.25% per year.

But our real-world experience tells us the official inflation rate doesn’t reflect the actual cost increases of everything from burritos to healthcare.

The cost of a regular taco was $1.25 in 2010. By official standards, it should cost a dime more. Oops—it’s now $2 each, a 60% increase, six times the official rate.

The cost of a Vietnamese-style sandwich (banh mi) at our favorite Chinatown deli has jumped from $1.50 in 2001 to $2 in 2004 to $3.50 in 2016.  That $1.50 increase since 2004 is a 75% jump, roughly triple the official 27% reduction in purchasing power.

So let’s play Devil’s Advocate and suggest that these extraordinary increases are limited to “food purchased away from home,” to use the official jargon for meals purchased at fast-food joints, delis, cafes, microbreweries and restaurants.

Well, how about public university tuition? That’s not something you buy every week like a burrito. Getting out our calculator, we find that the cost for four years of tuition and fees at a public university will set you back about 8,600 burritos. Throw in books (assume the student lives at home, so no on-campus dorm room or food expenses) and other college expenses and you’re up to 10,000 burritos, or $65,000 for the four years at a public university.

University of California at Davis:

2004 in-state tuition $5,684 
2015 in state tuition $13,951 

That’s an increase of 145% in a time span in which official inflation says tuition in 2015 should have cost 25% more than it did in 2004, i.e. $7,105.  Oops—the real world costs are basically double official inflation—a difference of about $30,000 per four-year bachelor’s degree per student.

Here’s my alma mater (and no, you can’t get a degree in surfing, sorry):

University of Hawaii at Manoa:

2004 in-state tuition: $4,487
2016 in-state tuition: $10,872

Sure, some public and private universities offer tuition waivers and financial aid to needy or talented students, but the majority of households/students are on the hook for a big chunk of these costs. And remember that many students are paying living expenses, which doubles the cost of the diploma.

If you think I cherry-picked these two public universities, check out this article:

So the divergence between real-world costs and official inflation isn’t limited to burritos; it’s just as bad in items that cost tens of thousands of dollars.

The Official Fantasy of Hedonic Adjustments

In the official calculation of inflation, hedonic adjustments offset soaring costs: that 160% increase in the cost of a burrito is offset by the much lower cost for computers, especially when the greater processing power and memory are accounted for.

Clothing has also gotten cheaper, and this theoretically offsets higher costs elsewhere.

The problem with this is sort of calculation is that we have to eat every day and we have to pay higher education costs if we want our kids to remain in the middle class, but we only buy a new “cheaper” computer once every few years, and we don’t even have to buy new clothing at all, given the proliferation of used clothing outlets, swap meets, etc. (I do my annual clothing shopping at Costco: two pair of jeans for $15 each , one pair of shoes for $15, etc.)

The savings on $100 of new clothing per year or a $600 computer every three years does not offset the doubling or tripling of costs for items we consume daily or big-ticket essentials such as higher education, rent and healthcare.

Official Inflation: A Flawed Metric

Official inflation also assumes that consumers will actively substitute a cheaper alternative for whatever is soaring in price. If a burrito doubles in cost, then the consumer is supposed to buy a banh mi sandwich instead. (Oops, that doubled in price, too. So much for substitution gimmicks.)

The problem is pretty obvious: there are no alternatives for big-ticket essentials. There is no “cheaper” substitute for a four-year public university diploma or meaningful healthcare insurance. There is also no alternative to renting a roof over your head if you can’t afford to buy a house (or don’t want to gamble in the housing-bubble casino).

The scale of the costs matters. If I bought a burrito every working day (5 per week, with two weeks of vacation annually) for four years, that’s 250 per year or 1,000 burritos over four years. That’s one-tenth the cost of a university degree—assuming I can get all the classes needed to graduate in four years.

I can always lower the cost of lunch by making a peanut-butter-and-jelly sandwich at home rather than buying a burrito for $6.50, but there are limited ways to reduce the cost of a public university, which is already the “cheaper” alternative to private universities.

Even stripped-down healthcare insurance has soared in multiples of the official inflation rate.

Inflation in big-ticket items adds up to tens of thousands of dollars—costs that can’t be offset by choosing a cheaper mobile phone, cheaper clothing  or substituting a peanut butter sandwich made at home for a burrito at the taco truck.

Even if you skip buying lunch for four years, you’ve only offset 1/10th of the cost of a university diploma, a four-year stint in which the student lives at home and also eats peanut-butter-and-jelly sandwiches every day for four years (at least in in our barebones example of books, tuition and fees only, no dorm or university-provided food expenses).

As for healthcare: feast your eyes on this chart of medical expenses.

According to official inflation calculations, the $12,214 annual medical costs for a family of four in 2005 “should cost” $14,963 today in 2016.

Oops—the actual cost is $25,826, $10,863 higher than official inflation, which adds over $100,000 in cash outlays above and beyond official inflation in the course of a decade.

So let’s add the $30,000 per university student above and beyond inflation for two college students over a decade and the $100,000 in healthcare costs that are above and beyond inflation over that decade, and we get $160,000.

Since deductions for education and healthcare don’t completely wipe out income taxes, the household has to earn close to $200,000 more over the decade to net out the $160,000 to pay typical college and healthcare costs above and beyond what education and healthcare “should cost” if inflation in big-ticket items had actually tracked official inflation.

$100,000 here, $100,000 there and pretty soon you’re talking real money in a nation in which median household income is around $57,000 annually.

So if a household’s income kept up with official inflation over a decade, that household would have to earn at least $20,000 more per year just to keep pace with real-world, big-ticket cost increases.

That’s the problem, isn’t it? If the household’s wages only kept up with inflation, there isn’t another $20,000 a year in additional income needed to pay these soaring big-ticket costs. So the shortfall has to be borrowed, burdening the household with debt and interest payments for decades to come, or the kids don’t attend college and the household goes without healthcare insurance.

I’ve done some real-world apples-to-apples  calculations on our household’s costs of healthcare insurance, which we buy ourselves without any subsidies because we’re self-employed and we earn too much to qualify for ACA/Obamacare subsidies. (I would have qualified easily for the subsidies due to low earnings for the 20 years prior to Obamacare, but weirdly, as soon as ACA passed my income increased. Go figure.)

We’ve bought our stripped-down healthcare insurance from one of the more competitive non-profit providers, Kaiser Permanente, for the past 25 years. We’ve had the same plan (no meds, eyewear or dental coverage, and a $50 co-pay for any visit) for the entire quarter century. (Our plan is now grandfathered; the ACA equivalent is more expensive.) To keep the comparisons apples-to-apples, I compared identical coverage for the same-age person from year to year.

In 1996, the monthly cost to insure a 43-year old was $95. Now, the same plan for a 43-year old is $416 per month—more than four times as much for the same coverage.  If the costs had risen only in line official inflation, (52% since 1996), the monthly costs would be $145, not $416.

The cost of insurance for a 55-year old in 2008 was $325 per month. Today, the same plan for a 55-year old is $558, a 72% increase over a time span that officially only logged an 11% increase in inflation.

Last but not least, let’s look at a government-provided service—weekly trash pickup.  Since 2011, our trash fees have gone up 34.5%, compared to the official reduction in purchasing power of 6% since 2011.

Once again, real-world costs have soared at a rate that is almost six times higher than the official rate of inflation.

The reality is real-world inflation in big-ticket essentials is crushing every household that doesn’t qualify for government subsidies of higher education, rent and healthcare.

In Part 2: How To Beat Inflation, we examine a number of strategies for offsetting the soaring costs of everything from burritos to healthcare -- with particular focus on the investments and actions you can take today, inside and outside of the markets, to preserve the purchasing power of your wealth from the nefarious "stealth tax" placed on your money by the kind of inflation discussed above.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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Looney's picture


The Burrito Index – improving people’s lives one fart at a time.   ;-)


KnuckleDragger-X's picture

Too expensive to live, and too expensive to die.. Where's limbo when yyou need it?

Midas's picture

Instead of buying 2 burritos in 2001 you could have bought an ounce of silver.   Now that ounce of silver buys three burritos.  Has anyone ever tried using silver as money instead of central bank issued monopoly money?

pods's picture

That is because we have a burrito covering shortage. President Camacho is going to fix that. I heard it in a speech.


petar's picture

160% sounds about right

Diet Coke and Floozies's picture

In 2008 the price of 500 g cheddar cheese in southern ontario tripled in 3 months. On sale it is still 25% more than pre 2008.

rrrr's picture

Expecting government office holders to fix economic problems is like hiring an Italian chef to pilot an aircraft carrier.

MisterMousePotato's picture

The title of the article suggests that it (the article) will be about burritos, but the bulk of it was about the cost of government.

"Government is not the solution. Government is the problem."

mkhs's picture

Get off your fat ass and make your own burritos; it is much cheaper.

PresidentCamacho's picture

I know shit is real fucked up right now, but in about 500 years I'll fix everything, i got this guy, i don't know



RadioFlyer's picture
RadioFlyer (not verified) Midas Aug 1, 2016 1:30 PM

but you'd be dead today, as silver doesn't fill stomachs like a good burrito.

Katos's picture

I found a great deal in San Jose ca. It's a cremation,  they pick the body up, cremated it, give you the ashes to spread where you want,  $995.00!

Econofresh's picture

The Burrito Index works a bit like the Baltic Dry Index.

Higher demand, higher price...

If there's to many new ships entering service, the index drops...

but that's where the Burrito Index is going weird...

as there more Mexicans entering service in America and yet the price rises...

si si essai... si si...

Zero_Ledge's picture

Strangely, the price of farts (natural gas) has been on the decline for a while.

Paul Kersey's picture

Here's an inflationary stat the author mmissed:

"In 1960, the average American male weighed about 166.3 pounds, which was the average weight for American women in 2010 at 166.2 pounds, which marks about a 18.5 percent increase. The average weight for women in 1960 was 140 pounds, according to the CDC report."

When cigarettes got expensive, people smoked less, but as food got more expensive, people ate more. Consequently, fewer folks with lung cancer but more folks with obesity-caused heart, diabetes and other cancers. Obesity is the cash cow (no pun intended) of the health care industry. Inflation of waistlines causes inflation of health care.

Consuelo's picture



You just touched on perhaps the Biggest (pun intended) 'secret' hiding in plain sight...


- Diabetes

- CHF & related

- Cancer

- Orthopedics (this one is Huge.   Better than 75% of all lower body joint replacements are a Direct result of chronic obesity)


If people even got reasonably 'healthy', the entire Sick-care industry would implode.   It would make bank & auto losses look tame by comparison.

Killdo's picture

there is a great book about this scam written by a former editor of Men's Health (he foudn out hsi biological father he didn't know was dying from diabetes so he did a lot of research - the moral fo the story American Diabetes Association gives damaging advice and hides the simple truth you can reverse diabetes by dietary changes and exercise):

DontFollowMyAdviceImaDummy's picture

Perfect article that gives FACTUAL EXAMPLES OF WHAT ACTUAL INFLATION IS AND HAS BEEN FOR OVER A DECADE.  I wish we could still vote-up articles... this one is a 5.

KnuckleDragger-X's picture

Too complicated for a Phd in economics to understand......

Tom Servo's picture

We are too stupid and racist to understand PHD's in economics...


bob_bichen's picture
bob_bichen (not verified) Tom Servo Aug 1, 2016 11:58 AM

There. Is. No. Inflation.

Now you may be confusing the Urban Legend of some individual items in the Great American Marketplace having experienced Inverse Declines in relevant price points but just because it "seems like everything costs more," the fact remains that the Official Inflation Index accurately portrays what we want to be true.  You just aren't working hard enough to "believe!" 

vq1's picture

dangit, youre right.... And when the debt jubilee happens Ill be the dumbass, because I have very little debt, while my colleagues will all enjoy their new jeeps and jet skis, paid off by my freakin tax dollars!

mkhs's picture

Don't forget the chocolate ration will be increased from 5 grams per day to 25 grams per week.

Killdo's picture

the shittiest of all 'sciences' - it's more a religion than a science

bob_bichen's picture

IF you have a ZH account, log on and you CAN up-vote articles.  (YOU got 18 upvotes already!)

HopefulCynical's picture

You can upvote comments, not articles themselves any longer.

rongos's picture

Yep. 3% inflation per year, for 15 years, equals 156% raise in cost. But Zero Hedgers are not good at maths.

r101958's picture

CHS-Good job! Another article that tells it exactly like it is.

NoWayJose's picture

The only good thing from these too low bogus inflation numbers is that government employees working for the Federal Reserve have gotten smaller pay increases!

ejmoosa's picture

Be certain that they realize that and are working less than they ever have.

mkhs's picture

What NIRP?  When you don't work, how can you work less.  Silly bunny.

Bay Area Guy's picture

When you manipulate the data to eliminate those market items that have increased the largest, of course inflation is a lot lower.  If, however, you live in the real world, you know that inflation has absolutely killed you.

FireBrander's picture

Shacks in neighborhoods where pizza delivery isn't avaiable, are selling for $100k around here. "With such low rates, it's cheaper than renting!" is how they are sold.

Sadly, it's true, it is much cheaper to buy a dilapidated house than it is to rent it...

vq1's picture

I recently rented a house. My gf asked the agent if she was aware of the luxury housing collapse in our area (in response to the agent, gleefully, bragging about a 1.5mil condo she closed). The agent turned pretty hostile. 


no no, the housing market is doing fine, plenty of buyers. 

True Blue's picture

It is just in a 'gully' right now... so come get 'gulled' on a new home today!

juicy_bananas's picture

This guy's an idiot.

NoWayJose's picture

We now have chained inflation - so you stop buying your favorite $6.50 burrito and substitute two $1.00 gut bombs from Taco Bell!

all-priced-in's picture

Except that $1 Taco Bell taco now costs $1.19.


I recall when the first Taco Bell opened up by my house -


Tacos were $.29 each - and they always had a special - buy 4 for $1 






ironicmerman's picture
ironicmerman (not verified) all-priced-in Aug 1, 2016 11:59 AM

I think the T-Bell quality has improved some since then.  I don't hear "Taco Hell" thrown around nearly as much now.

all-priced-in's picture

The food tastes OK - it is the uncontrollable projectile diarreha that keeps me away -  


Skiprrrdog's picture

I would not feed those wetback ass-scrapings to my dog...

pakled's picture

That might be back around the time Dairy-Queen ran specials for 10 burgers for $1.

mkhs's picture

And if you got off your fat ass and made your own, what would be the price?

FireBrander's picture

100's of eateries in this town; I can only think of a dozen worthy of my money.

Years back, there were lots of 'mom and pop" shops, they're still there, but the kids are running them...and all the kids are interested in is the money. Italian, familiy owned pizza shop, in business for at least 40 years and A+ food...parents retired, kids took over, food is absolute shit...sausage sandwhich went from fresh, locally made sausage, to a frozen patty; total, rings, all shit now...all factory food...wood pizza oven replaced with an electric...sad.

hendrik1730's picture

That's because the younger generation has absolutely no intention to work hard, have absolutely no idea of what quality looks like and are absolutely undereducated. My stepson doesn't even know how to replace a burnt out light bulb. Or repair a blown fuse. A bicycle tyre. Once upon a time, the starter cord of the lawnmower broke. Insead of replacing the cord, he bought a new lawnmower. And I can go on for hours like this .... the youngsters have no hands nor brains anymore. But : experts when it comes to "apps" and mouseclicks. They have not the slightest clue how a computer works, but : one doesn't need to know anything about a business in order to run it, eh??? All big managers that want to get rich at age 35 but no knowledge of anything that really matters.

Zero_Ledge's picture

I'm only 40, and I have the same observation.  At my last job, there was a young programmer guy who had an engineering degree.  He was building his own 3-D printer for fun.  But when he stripped a screw putting it together he was totally stumped.


FireBrander's picture

Neighbors garage door cable broke...I offered to help to save him some dough; he was too "scared" to mess with it...spent $300 fixing it..

Mine broke and 2hrs later it was back in business; total cost $9...


AC fan would run, but no compressor...failed capacitors...most local shops refused to sell me the parts; two that would had crazy high prices.

ZORO delivered price $25...another neighbor had the same problem; they talked him into replacing the entire system for $1800 with the old "it will cost almost as much to fix it as it would to replace it" line.

HopefulCynical's picture

Where can those so inclined learn these things? When I was younger I really didn't care, but now I do see the value in learning basic mechanical and electric repairs.

zuuma's picture

youtube is your friend.  amazing, actually, for any repair.