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A government agent, on the prowl for inflation

Dan Dugan collects data for the Consumer Price Index, which affects households as well as corporate executives.

Wendy Maeda/Globe Staff

Dan Dugan collects data for the Consumer Price Index, which affects households as well as corporate executives.

Dan Dugan appears without warning at ­supermarkets, auto lots, and funeral homes across Eastern Massachusetts, a government agent with a thick black computer tucked under his arm and a veil of secrecy surrounding his work. His mission: Track the prices of hundreds of items, from apples to used cars to caskets.

Dugan is an economic assistant at the Bureau of Labor Statistics, and he works on inflation’s front line, collecting information used to calculate the Consumer Price Index, the best-known gauge of inflation.

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The data he collects will determine the cost-of-living increases for more than 50 million Social Security recipients, while shaping the decisions of economic policy makers, the debate in the presidential campaign, and the shopping habits of average Americans keenly interested in rising prices.

Apples? The index shows prices are up nearly 10 percent from a year ago. Peanut butter? 12.3 percent more expensive. Chips and snacks? Plus 7.1 percent.

“I’ll price around a hundred items a week,” Dugan said as he reviewed bacon prices at a Needham supermarket on a recent morning. “I’m sending data to Washington nearly every day.”

Inflation is closely monitored because of its far-reaching implications for the US economy, ­financial markets, corporations, and households. The rate of inflation recorded by the Consumer Price Index will help determine whether the Federal Reserve cuts or raises interest rates, investors buy stocks, bonds, or commodities, and consumers and businesses save or spend.

Inflation also figures prominently into the question heard often on the campaign trail: “Are you better off than you were four years ago?”

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When rising food, gasoline, and other prices undermine purchasing power and pinch household budgets, it can affect consumers’ views of their economic well-being.

Overall inflation is low, but it remains at the forefront of economic debate as the Fed pumps more stimulus into the economy in the hope of accelerating growth and quickly lowering unemployment. Some analysts worry that so much stimulus — the Fed has pushed short- and long-term rates to historic lows and recently launched efforts to drive mortgage rates even lower — could spark a burst of ­inflation.

Chris Christopher, an economist at IHS Global Insight, a Lexington forecasting firm, said the “concern is that this effort by the Federal Reserve is like hitting a ketchup bottle a little and a little more and a little bit more until all of the sudden ketchup goes everywhere,” adding that he thought such a spike was unlikely.

Dugan, the government pricing agent, is constantly on the hunt for inflation, gathering prices for mouthwash, sausages, even the cost of a haircut, as part of his duties. He is part of a massive government operation involving hundreds of price-checkers tracking down the prices of 83,000 goods and services across the nation every month.

The operation involves a high level of confidentiality.

While the price of cereal is not exactly a state secret, the Bureau of Labor Statistics requires reporters and photographers to sign affidavits promising not to reveal the name of businesses where prices are collected or the brand name of any product because participation in the survey is voluntary and the bureau pledges confidentiality.

Dugan’s assignments arrive electronically three times a month, telling him the 15 to 20 locations he must visit. On a recent morning, he looked for bacon and thick cut ham at a Needham supermarket, apples at another in Dedham. It’s not terribly exciting, the gray-haired former health care executive said. But he can arrange his own schedule and there are interesting moments.

While pricing women’s apparel in Boston a few weeks ago he found himself perusing the same racks as actress Jamie Lee Curtis. (Exactly where? No comment.) Another time, he was pricing expensive women’s lingerie at an undisclosed location when two security guards, watching him handle too many skimpy undergarments for a little too long and unaware of his role, tried to force him out of the store.

“I couldn’t get over how expensive some of the items were,” Dugan recalled.

Dugan does not usually get to choose the items he prices. Labor Department economists in Washington make those selections, based on survey data from 14,000 families’ shopping habits.

Looking for Red Delicious apples on a recent weekday at a supermarket in Dedham, Dugan found the price and logged it with his tablet computer. Empire apples, another variety on his list, were not yet in season. There was also no entry for a certain brand of thick-cut bacon that cannot be named here because the market was out of stock after putting it on sale.

Meat prices in general are expected to rise over the next year because a severe drought in the Midwest devastated wheat and soybean crops, sending grain prices soaring and with them the cost of feed for livestock. The price of bacon has risen 14 percent in the past two years, according to the Labor Department; the cost of steak has jumped 9 percent in just the last 12 months.

In New England, a region that traditionally pays higher food prices, such increases put an added squeeze on family budgets. Food prices in Greater Boston rose 2.4 percent from August 2011, compared to an average increase of 1.5 percent in US cities and 1.7 percent across the Northeast, according to the Labor Department.

“It’s an expensive place to live,” said Dugan, who would know.

Of course, not all prices are rising. TV prices have plummeted 19.5 percent, on average, over approximately the past year. Natural gas prices have fallen 12.7 percent. And potatoes? Down 8 percent.

Dugan, who has worked for the Labor Department for seven years, said he logs so many prices he can’t keep track of which ones are rising or falling.

And when he’s not logging prices, he’s typically outside playing golf, not shopping.

Yet the work has its moments.

“Six-figure automobiles are fun to price,” he said.

Look for the fruits of Dugan’s handiwork when the Consumer Price Index for September is released on Oct. 16.

Megan Woolhouse can
be reached at
mwoolhouse@globe.com.

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