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

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)

This is a companion discussion topic for the original entry at

Sadly, much more accurate than any government statistics.  Well done Charles!
The CPI must be managed in order to keep Social Security from imploding.  I feel for all those on fixed incomes as almost everything necessary for life's basic needs has been rapidly inflating. Meanwhile the COLA's are laughable.

good article, charles.
only thing i would differ on is this:

"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,"

i'm not convinced that "higher education" is all that worthwhile for the vast majority of youngsters; the college racket suggests that when you graduate you'll be able to get a job and be well paid. the reality is, you'll quite likely have a hard time finding any decent work and you'll be burdened with crushing debt.

unless the kid has a very clear focus on what they want to study, a better use of the money might be to fund their travels and let them see the world for themselves, figure out who they are, what interests them, and what they want to do.

i wish that's what my parents had done for me.

This week either sax player or jdargis posted an article on dental care costs.I read the piece and the article stated that the cost of a crown back in 2000  was 300 dollars.Today ,the average runs 3,000 .The cost of a dental implant in MA now runs 5,000 dollars.Most companies have figured out ways to no longer provide coverage.If you are not covered you pay retail price!Make no mistake,it is retail,operating under the guise of healthcare!The middle and working class are the ones getting hosed.

Several years ago my partner of 30yrs was preparing to have some cosmetic surgery. I approached the physician about a cash discount, i.e. "Franklins". Some moments went by then a smile emerged out of surprise.


12 half-pints of fig jam, grocery store cost $4 each = $48 worth of food . Since we grew the figs ourselves and only bought the walnuts (which we can get locally), sugar, and miniscule amounts of spice our total cost was $2 for all 12 (not counting the reusable jars). Take that,  Burrito Index!

Your Post
Today's Canning Haul

12 half-pints of fig jam, grocery store cost $4 each = $48 worth of food . Since we grew the figs ourselves and only bought the walnuts (which we can get locally), sugar, and miniscule amounts of spice our total cost was $2 for all 12 (not counting the reusable jars). Take that,  Burrito Index!


[quote=Edwardelinski]This week either sax player or jdargis posted an article on dental care costs.I read the piece and the article stated that the cost of a crown back in 2000  was 300 dollars.Today ,the average runs 3,000 .The cost of a dental implant in MA now runs 5,000 dollars.Most companies have figured out ways to no longer provide coverage.If you are not covered you pay retail price!Make no mistake,it is retail,operating under the guise of healthcare!The middle and working class are the ones getting hosed.
33 years ago, my crown fee was $300. Today it is $1150. I am in the DFW area and the average crown fee is not remotely close to $3000. Delta Dental, my largest carrier, only allows $775. There are two sides to every story. If you are paying $5000 for an implant, you are going to the wrong office. Are you talking about an implant AND an abutment AND a crown? That is what is required for complete replacement of a missing tooth.
Oh, and now I am getting insurance reimbursements in the form of a credit card voucher, I get gigged by the transaction fees. Think Ole Mr. Insurance might be getting a kickback?
I would gladly cut my fees by 20 to 30 percent and take cash. The problem with that is that most people would really prefer to pay nothing, yep nothing, out of their pocket. The patients expect us to know the ins and outs of every plan. Our patient base has more than 100 different coverages.
I can honestly say that I work 40% harder today to make the same money I made 13 years ago. I have had a wonderful career, but I wouldn’t want to be starting over in today’s environment.
The average dental student now graduates with $275k in student loans and more and more have little choice but to get on the hamster wheel of a corporate dental office. That business model has the same overhead I do WITH the addition of a management layer AND investors expecting a return.
By the way. Does your implant dentist use a CBCT in his treatment? God help him if he has a hiccup on a case without using one and they aren’t giving those things away.

Great article Charles!
Progressive impoverishment as we are bled dry year after year. We certainly have experienced this process though we track it in a different way. Trying to actually keep track of individual product costs in near impossible since product sizes keep shrinking and the products themselves are altered ("new simpler recipe"). For the most part we are getting more packaging and increasingly inferior products to provide the illusion of price stability. In the end you still have to eat as much after you did before so the inflation can be seen in the aggregate food costs you pay. Our annual inflation rate has been running 10-11%/yr for supermarket expenses even as we have been eating lower or less frequently on the hog, bargain shopping, substituting other products or shifting brands, making use of our local CSA, having a small garden, and canning. I do hope that there is a special place in hell for those who conceived of, approved and instituted 'hedonics' and other financial sleights of hand to mask inflation.

That said, I really liked your burrito index but would only caution that it is unlikely you are comparing apples-to-apples or burritos-to-burritos so to speak as everyone in the economic food chain is stuck in the same game. The burrito truck and all of their suppliers have had to trim expenses wherever possible before raising prices. Are the ingredients and quality the same as 5, 10, 20 years ago? Same beans? Who made the tortilla and from what? Real sour cream or cheese and from the same quality of milk? Etc. Everyone in the chain is having to cut corners to stay profitable.

There truly is a destructive genius at work that has corrupted our markets with hidden inflation. The implemented machinations for skewing inflation measures have taken what were positive traits of 'substitutability' and innovation that yielded incentives for better products and smarter consumers and turned them into punitive tools for punishing anyone who does not eternally reduce costs/expenses at the expense of quality/nutrition/health. It used to be that those who could actually make a quality product more cheaply or efficiently were rewarded for their ingenuity. Consumers could always vote with their pocketbooks or feet if someone provided an inferior product. Quality mattered as well as price. Now however it is not choice but necessity that forces a race to the bottom of acceptableness. It is not a question of improving a company's profitability or thriftily feeding your family it is all about survival, staying out of bankruptcy or the poorhouse. The incentives are now for companies to cheat and lie to the consumer instead of educate and impress. There have always been these business strategies but when consumer purchasing power stayed the same or increased there was a check on peddling inferior products since products of inferior quality would be selected out through competition. Now though, the consumer doesn't have a choice of selecting a cheaper product, s/he has the need to spend less year after year and this makes all of the difference. As much as you might like to buy a higher quality product you can only do so for so long or for so many of your consumables before the aggregate costs force you to either buy cheaper or eat less. You can only eat less for so long before you have to adopt lower standards. There are things you say that you would never eat but all throughout history people have eaten anything they could from bugs to rats to shoes when push comes to shove. We aren’t at those extremes but we are on the same road. Companies are increasingly punished financially for maintaining high standards and quality, therefore those that survive collectively debase their products year after year. It is not avarice so much as necessity driving the process. The consumer still has the illusion of choice but the baseline for the range of available products keeps shifting lower. Our expectations are being managed downward.

The government lies to us and tells us the economy is thriving or at least growing slowly. Producers lie to us telling us we are getting better products at lower prices. Lastly, we lie to ourselves that everything is ok, we can manage, or that the problems are temporary. None of this is sustainable, it is only a question of when things will hit their breaking point. This is what financial starvation looks like.

I live in a suburban area of the Southeastern US. I do not have dental insurance and crowns are now about 3k per tooth in my area.  
I need to travel to Texas for my dental care!

For major work, while international transport is still viable, consider taking a vacation to sunny Costa Rica.

Thanks to everyone who posted comments–you have filled out the wide spectrum of issues relating to the decline of our purchasing power and as Mark C. pointed out, a decline in quality and quantity that masks the loss of purchasing power.  I notice all kinds of cost-cutting of the penny-wise pound foolish variety: appliance manufacturers are using less paint /primer so rust develops on the lower edges of fridges and stoves in a few years, for example. How much did scrimping on paint save? Less than $5? Or maybe less than $1?
Re: dental costs and practice: a number of MDs I know have reported that they made more money at the start of their careers in the early 1980s than they do now at the apex of their careers. Higher costs, lower insurance payments, longer hours… that is a pattern not just in medicine but in other fields as well.  I don't know a single physician who would choose medicine as a career if they were starting out.

Medical tourism in places like Thailand is so much cheaper due to the relatively low overhead costs in these countries, and the relative strength of the USD.

"Opting out" of high-stress professions starts looking attractive when the workload rises and income declines.

Nice work on the canning, Wendy. That is one tangible way to drastically lower costs and improve quality.

RE: Reflector's comments on college as a racket – I heartily agree with the many comments questioning the value of a degree, and wrote an entire book on an alternative (or parallel) approach: "The Nearly Free University and the Emerging Economy." A structured apprenticeship would provide more learning in much less time–and it would acquaint the student with real-world workplaces and value creation.

Yeah I'll second the medical tourism thing.  $600 gets you a crown done by a dentist working at one of the better-known high end hospitals in Bangkok.  Perhaps your $1200 round trip airfare gets you up to $2000.  Then you have $1000 to spend doing whatever it is you like while you wait for the process to be done.
Costa Rica is a much shorter trip, I'm sure.

Here's a price list posted to a website I found via google.

Divide by 35 to get prices in USD.


Quality and risk varies among countries and among facilities.
See: Multistate US Outbreak of Rapidly Growing Mycobacterial Infections Associated with Medical Tourism to the Dominican Republic, 2013–2014



Earlier this week I received pre-authorization from Delta Dental for a porcelain crown.  My dentist's fee is $1200 (California).  I asked if he would give me a gold crown instead of porcelain, and he told me it would be too visible.  And then he added "you ain't from the hood."

The cost of an implant in PA 3 grand.The same in MA 5 grand.The piece I read was written by a dentist.For those only paying 1,200 consider yourself very lucky…Either way its expensive and takes away from other things… 




With the price of gold and the technology advancements in milling ceramic crowns, my lab fees are MORE on a gold crown. In fact, on many cases my lab guy will call and say, "Are you sure you want a gold crown?".

Here is a crown fee in FL.

If you are paying $3000 dollars for a crown and are unhappy, look around. Not everyone wants to drive a Lexus.

I would think that the only way you are paying that for a crown is at an office that is FFS (fee for service) that accepts no insurance.

The oral surgeon that I use on my implant team is, I assure you, one of the best in the country. I have restored probably 200 of his implants and he just rocks. Hint: Not everyone does. His fee on an uncomplicated implant is $2800. He will guarantee them for as long as he is in practice. I do the same on the crowns I place on those implants.

One of the biggest assets the "big medicine" machine has is the fear that the rest of the world is full of idiots and only US medical care can possibly measure up.  [FWIW, my older sister is a doctor; I'm not dissing the profession, just the giant harvesting machine that everyone appears to be trapped inside]

While engaged in martial arts training in Thailand, I had a small accident.  After procrastinating for a couple of weeks, I finally went to see a doctor.  I walked in, saw one within 30 minutes, who poked around at my elbow and suggested I just wait for the problem to go away.  I asked him, "would an X-ray confirm nothing is really wrong?"  He thought about it and said sure, get an X-ray.  How much?  300 baht - about $10.  Boy, at that price, I couldn't resist.  So off I go to x-ray, where I wait maybe 5 minutes, get my x-ray, take it back to the original doc, who looks at it, points at the x-ray of the offending joint, and says "yes, see that white line there?  That means no problem."

For everything, it was less expensive than my Kaiser copay, and I was in and out in about 60 minutes, no need for talking with the advice nurse, or making an urgent care appointment and then of course the waiting.  I just walked in, paid cash, and walked out.

I've tried the more expensive hospital, Bumrungrad.  They have a nicer facility, the english language skills of the staff are better, the flock of nurses they have on duty are much more solicitious (I walked-in there too, to be told "I'm so sorry you'll have to wait a bit to see the doctor"  How long?  "Five minutes") and - I'm just saying, you should try it before succumbing to the fear.

If you have a "really interesting problem" I have no idea how they would measure up, but for problems I had (that were all just basic care issues) I had a number of good experiences.

I suspect most of us don't have "really interesting problems", at least not most of the time anyway.

Respectful question (knowing that the best plastic surgery in the world is in Venezuela for example but,…)
What happens if you need a follow up appointment down the line?  And the country collapses like Venezuela?  I know someone in this situaiton which is why I am asking. Of course the US doc who filled in was not as good they just do better plastic surgery in Venezuela it is a cultural thing I am told.

Also no recourse for malpractice action that I know of but still it is much cheaper and some of these centers are quite good in India or so I have read. 

The easiest cheapest and nicest emergency medical visit I ever had was in Canada 25 years ago. I am not against going out of the country to get care. These are my barriers. My healthcare costs without any new illnesses or problems have doubled in the last 2 years due to out of pocket premium increases and in network deductibles. So I see the problem and am looking for solutions as well. 

Thank you Charles as always

Thanks for a nearly comprehensive review of real inflation! I say "nearly", because the ideal would be to recompute the whole CPI by the pre-1980 methodology- as a Lesperes-type index- and no one outside the BLS has the data to do that.
One small nit: when inferring an annual rate from a multi-year increase, you have to remember that inflation compounds. 6% over 6 years doesn't work out to 1% per year. Without doing the math, you could say it's closer to 2/3% per year.

The official CPI measures an amalgam of price inflation, substitution and hedonic adjustments. The goal seems to be to measure the increase in prices actually paid for goods, minus the hedonic adjustment. We're paying a hedonic "premium" for some goods, which the BLS refuses to consider as a price increase.