An Examination of an Alternative WIC Food Cost Inflation Index – Final Report to Congress

Excerpts from the Introduction: The Food and Nutrition Service (FNS) attempted to develop a new inflation index to consider for use in the funding formula used to allocate food funds to States in the Special Supplemental Program for Women, Infants, and Children, commonly known as the WIC Program. In 1990, in response to a large and unanticipated rise in food costs, FNS began developing the index with the goal to better project inflationary trends in the WIC Program. Later that year, in the language accompanying the FY 1991 WIC appropriation, Congress directed FNS to "develop an inflation index for use in adjusting the WIC allocations based upon foods that are prescribed for use in the WIC food package." The index was developed by USDA's Economic Research Service (ERS) with assistance from the Office of Analysis and Evaluation, FNS and the Bureau of Labor Statistics (BLS) of the U. S. Department of Labor. The index was developed to determine if it could eventually replace the Thrifty Food Plan Index in the WIC funding formula used to allocate WIC grants to states and potentially to develop WIC budget and participation estimates and to monitor WIC food costs. This paper presents the index model, discusses issues related to its use, and includes recommendations regarding the use of the WIC index.