SocGen's Omair Sharif said that the total...>

US VIEW: SocGen's Omair Sharif said that the total weight in CPI of certain food

items that had price cuts by Whole Foods occurs amid the fact that "there is no

published detailed expenditure weight for some items. For example, avocados are

categorized as part of the "other fresh fruits" index. That index has a weight

of 0.226%, but clearly there are other items within that measure. Thus, our

1.21% weight almost certainly overstates the total. In any case, on the surface,

the prices cuts will impact a small slice of the CPI.

- He adds that "second, the price cuts bring the cost of several items available

at Whole Foods closer into line with those recorded by the BLS. The BLS items

will not be exact substitutes for the items at Whole Foods that are experiencing

price cuts," but data suggests "that other grocers may not need to cut their own

prices further, as they are still below the new ones offered by Whole Foods.

Finally, we suspect that the smaller footprint of Whole Foods in the grocery

business (about 1% compared to about 14.5% for Wal-mart) translates into a far

smaller number of quotes for various food items in the BLS sample, further

limiting the impact of the price changes."