Food habits haven't changed, nor have quantities. I shop at a mixture of Food4Less, Ralphas, Gelsons and a few small items at Whole Foods, but food expenditure has increased by 30% to 40% since start of 2020. Household energy usage has remained the same, but somehow the price is 20%+ higher than at the start of 2020. Monthly health insurance costs have increased by 17.1%
A gallon of milk or a carton of eggs is about where it has been for the past three or four years, because a gallon of milk or a carton of eggs doesn't go up by 3 cents each month, it jumps by a dollar once every three years. Low-end commodities like that tend to stay artificially deflated for a while. I am expecting milk, eggs, and other basics to jump by a dollar or two in the very near future.
I am just a single data point, but something seems "off" with all officially reported statistics. Something isn't being captured somewhere.
On other big-ticket items: My rent is exactly same as it was in 2019 (I pay the same rent for the same apartment). My commute (on transit) got a whopping 25% cheaper as they slashed the price of monthly passes. For leisure, the prices of Amtrak tickets, hotels, and AirBnBs are all down a lot, at least in the Northeast, maybe in the range of 30-50%. Fresh groceries are definitely a bit up, that much I agree with. My staple Amazon Subscription orders, though, are flat to slightly down, e.g. La Colombe canned coffee is about 15% down from its 2019 prices (used to be $12/4-pack and is now $10/4-pack).
Overall my cost of living is deflating a moderate amount. I suspect some of the disconnect is that supply/demand has shifted, e.g. cars have gotten more expensive while trains/buses have gotten cheaper. So those effects partly cancel out. I'm not going to argue they fully cancel out, but for me personally I have seen slight deflation.
I have noted increases in many staples on Amazon Subscriptions which include pet food, shampoo, shaving foam, pet treats and so forth. Routine pet medication at the vet has increased around 10% over the course of the year.
Oddly enough our 5lb bags of coffee have stayed the same price for almost 4 years.
Do you also happen to have data from before the pandemic? What was the trend then?
I'm surprised by seeing everyone in the whole thread and the article talking about the last two years. The way I see it, both shrinkflation and "skimpflation" were already blindingly obvious way before pandemic, and looking at the stats from the last two years makes reasoning difficult because of, well, a global pandemic.
But 2013 to 2019 was a stable period with few lifestyle changes and the trend was around 6% per year for my "basket of household items" with the occasional bumps of "milk just went up by a dollar at the local Food4Less lower tier grocery store." The largest inflationary food items I've seen have been meat and poultry.
The largest non-food inflationary items I've seen are gasoline and health insurance. Car insurance I cannot track due to a minor "at fault" accident adjusting insurance rates in 2018. Storage locker increases by around 4% per year. Household insurance increases by around 5% per year.
My life is only a single, but extensively tracked, data point. But "something seems screwy in the state of Denmark" to paraphrase Shakespeare.
P.S. I'm not in Denmark.
because it's averaged out across multiple stores across the country?
Note: the regulation targets “basic” milk, not pimped out milk with omega-3, 19g proteins, without lactose etc.
If your family are experiencing inflation higher than 20%, it's because you're consuming more of things which inflate faster than the basket.
This is the point where the burden on proof lays with those that claim the government methodology is relevant: What is the "basket of things" composition and how many Americans have a spending profile anywhere near that?
They present it as a way of looking at forex rates. If 1 USD buys you 1 swiss franc, but a Big Mac costs $5 here and 7 CHF there, then maybe the franc is overvalued. In any case you lose McDonald's purchasing power by converting.
But you could just as easily use it for inflation.
Big Macs are a stable product. A Big Mac sold in 1985 is very similar to one sold yesterday. Also, it includes a good mix of basic inputs. Land rents, transport costs, labor, and food ingredients.
Here's the raw data.
https://raw.githubusercontent.com/TheEconomist/big-mac-data/...
In the US, a Big Mac cost $2.54 in 2001 and $5.65 in 2021.
That works out to 4.0% annual inflation.
https://www.google.com/search?q=(5.65%2F2.54)%5E(1%2F20)&oq=...
The official numbers were 2% that entire time. Those come from a complex calculation using an always-shifting basket.
What keeps the CPI down is technological progress in other goods, like cars and TVs.
By the end of my tenure at McDonald's, we were cooking patties and storing them in steam warmers for up to 30 minutes before tossing them. The same patties were used for regular burgers and Big Macs. We'd create Big Macs as needed by demand, assembling them later.
I don't know the #s, but was told that this change was to reduce product waste.
Grilling equipment and process also changed over this time period, slightly reducing the number of staff needed to run the grill and reduce the likelihood of overcooked (and thus wasted) meat.
I imagine numerous other efficiencies/changes have been made over the decades that would influence the cost to make Big Macs.
There are a lot of ways to make things cheaper. The world has seen startling progress in logistics, organisation, science and tech in the last 30 years. Some of that is applicable to gathering food more cheaply.
I suppose maybe all the gains could have been eaten up (heh heh) by population growth. The underlying equilibrium here isn't static, at any rate. The real price of a hamburger will not be steady.
[0] https://www.ers.usda.gov/data-products/agricultural-producti...
That big mac is at the end of a literally global supply chain. The cost of the tires on the car of the fry cook and the number of temperature sensors one can afford to put in the reefer ship that gets the tomatoes from Argintina all have an impact on the overhead of a big mac. And this is in addition to all the direct process improvements others have mentioned. Heck, the internet has opened up a whole new world of operational efficiency for the farmer that grows the grain that feeds the cattle. He can buy parts for his machines or compare spec sheets for fertilizers from his iphone while sitting in the cab of his tractor that almost drives itself. In 2001 he had to thumb through a catalog or call someone.
1) Self-order kiosks. Definitely reduce costs and required number of workers needed at any time substantially.
2) Scheduling applications. More efficiently schedule workers, trade shifts, etc.
3) Improved warehouse, distribution infrastructure, logistics, coordination software, optimization around deliveries, predicted usage, etc.
Honestly, what they need is a voice AI to take your order in the mobile app.
- more reliable bun-making machines that need a lower ratio of human oversight / bun produced.
- more automation in packaging the meat patties.
The price of a big mac obeys supply and demand.
The actual cost of producing it is but one factor in many in the final price, and likely not the most important.
Where the hump is in the price vs actual volume of Big Mac sold curve actually is what matters.
Other than that price differences in food between $ and CHF are likely mostly explained because work hours simply cost a lot more around here.
Not sure why you would think that. McDonalds is famous for catering it's menu and service to it's locale.
In Australia they were required to serve real chicken in their nuggets, and they're always advertising that they use locally sourced beef for their burgers.
They also rebranded in a sense to upmarket themselves, and started selling salads, cakes and coffees in order to sneak a foot into the Australian cafe scene.
Hence, it’s a non standard product, and a pretty dumb basis for an index.
I saw Americans amazed at Europe’s “real cheese”, and Coca-Cola with “real sugar”. I have never heard the explanation for “real chicken” yet.
This is funny and scary at the same time.
USA (according to https://www.mcdonalds.com/us/en-us/product/chicken-mcnuggets... ) :
Ingredients: White Boneless Chicken, Water, Vegetable Oil (canola Oil, Corn Oil, Soybean Oil, Hydrogenated Soybean Oil), Enriched Flour (bleached Wheat Flour, Niacin, Reduced Iron, Thiamine Mononitrate, Riboflavin, Folic Acid), Bleached Wheat Flour, Yellow Corn Flour, Vegetable Starch (modified Corn, Wheat, Rice, Pea, Corn), Salt, Leavening (baking Soda, Sodium Aluminum Phosphate, Sodium Acid Pyrophosphate, Calcium Lactate, Monocalcium Phosphate), Spices, Yeast Extract, Lemon Juice Solids, Dextrose, Natural Flavors.
Australia (according to the PDFs here https://mcdonalds.com.au/maccas-food/nutrition ):
Ingredients: Chicken, Water, Flour (Wheat, Corn), Canola Oil, Starch (1420, 1422, Corn, Wheat, Tapioca), Mineral Salts (450, 500, 451, 341, 327), Salt, Spices (Celery, White Pepper, Black Pepper), Sunflower Oil, Dextrose.
It was Pink Slime for awhile. "Real Chicken" is the continuing strategy to claw back from the PR nightmare.
https://www.eatthis.com/mcdonalds-debunks-rumor-about-mcnugg...
Even assuming the 2% numbers are more representative of the average household, the 4% big mac number sounds entirely consistent with that.
TL;DR: this is interesting, but I don't see how this data clarifies anything.
I'm not an economist, but one fundamental problem with any consumer index (as far as I can see) is that as you become richer in absolute terms the marginal utility of any additional dollar goes down (eg your life doesn't change that much if you upgrade your already expensive phone but it changes a heck of a lot if you can't afford to buy enough food) and therefore poorer people experience far more harm from inflation than richer people. Not sure any index ever captures that effect adequately.
It sure seems like the big three these days are housing, food, and gas.
Housing is complicated, because it's less elastic. Moving sucks, is expensive and kind of emotional. It's sorta sticky because it's such an ordeal, so (I think) there's some scalping, charging a bit more because making a switch is just a pain in the ass.
Food is weird. if you can put together a hotplate and a sink, food can be relativly inexpensive, and tasty, but time consuming. If you can't it's pretty ugly. Personally, I'd probably just go with multivitamins and beer. Dual duty as calories and entertainment. That's a disaster long term though.
Gasoline sucks because it's a magnifying effect. Take a bag of rice. the rice gets trucked somewhere to get packaged. the bag gets trucked from a factory, the plastic gets trucked to the factory. Every step has a transportation cost, and it compounds.
I'm not rich. I could take a long break from work if I needed to, but I gotta work. I'm very lucky to be where I am. CPI makes a lot of sense for me.
I think it's not so great because a cop and a teacher couple with no kids, totally reasonable professions, damn near a Rockwell painting, struggle.
I don't think it'll ever be easy for everyone. but damn. does it have to be so damn hard at the bottom? I think the CPI doesn't really work out for the bottom N% and I'm not really sure of the value of N. I hope N is still kinda small, because if N gets big, things get really ugly for everyone.
I dunno. CPI is a metric. it has a meaning. mean median and mode have meaning, but they don't tell the whole story. I think CPI highlights some things, but don't think for a second it's the whole story.
A lot of people don't realise inflation is essentially a stealth cash wealth tax. It applies to savings, debt, dollar-denominated contracts, etc.
The poor don't hold debt. "I live in a nice house that's still owned by the bank" is not poverty.
And you might find that even many of the rich (who have far more in assets than they have in debt or cash) will still have more debt than cash, because while investing on debt is generally considered stupid, investing on debt that could be fully cleared by the the object invested in (house/land) as collateral is the exception. People rich enough to buy houses for renting out rarely pay them in cash. The winners of inflation debt decay are not who you think they are.
I would think that the poor have no cash… that's why they're called "poor" after all.
The bottom 50% of income earners can barely cover the 'necessities' (housing, food, transportation, healthcare):
* https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...
They have contracts denominated in cash—for example, their wages from employment. That's where inflation tends to hurt the most since wages tend to trail behind inflation (or deflation). And of course being "poor" doesn't imply that you literally have zero savings, though you probably don't have enough to be worth the hassle and expense of a brokerage account to invest in stocks, ETFs, or mutual funds. For small amounts the transaction fees alone would be more than the gains.
Regarding the article you cited, it occurs to me that the authors never mentioned how long any given household remains in a particular category. If I took a year-long sabbatical from work, for example, then I would end up in that "lowest 20%" group with zero income while I lived off my savings, but that doesn't mean I'm experiencing any kind of financial difficulty. The same goes for students still receiving support from their parents, or for anyone who is retired and living off of a lifetime's worth of investments (though probably not pre-tax 401(k)/IRA, depending on the study methodology, since these distributions are generally considered "income" for tax purposes). "Lowest 20% by income" is not a fixed group. This is apparent simply from the fact that expenses cannot exceed income indefinitely; eventually you must either increase your income, at which point you are no longer counted in that statistic, or else decrease your expenses. But the idea of a shifting group of households which temporarily earn less than they spend paints a very different picture than the one the article implies.
The benefit is that if the creditors (mostly upper classes) refuse to forgive the debt then you don't need an angry mob with pitchforks to cancel the contract (revolution).
Yes, bigger down payments suck but that is mostly a zoning/housing supply issue.
Only higher than expected inflation helps debtors. Lower than expected inflation hurts debtors.
I'm not sure why you think Creditors would consistently underestimate inflation. Maybe they do, but why would they?
One thing I am sure of, is that when inflation expectations change a lot so that there is a lot of doubt as to what future inflation will be, then creditors charge a higher premium for that perceived increase in inflation risk. That hurts debtors.
No, they do not, because they typically only hold the note for a few days before it gets securitized and sold onto a market that is pinned by a very large, inflation-agnostic player: The Fed.
Now, we'll see what happens to this market if and when they begin to taper, but I think all the non-Fed players in this market remember what happened the last time they tried it, and they're all betting, correctly, that Powell will be forced into not only NOT tapering, but increasing purchases.
All of these markets: treasuries, mortgages, auto loans, and junk bonds, know for a fact that there will always be an artificially high bid for their toilet paper. Why would they care?
The creditor who will ultimately hold that paper has a very different outlook on inflation rates than I do, but I’m happy to take the loan, especially since a side-effect is having a place to live.
Such questions deserve answers.
There is a lot that I skipped over, not wanting to get into the weeds of economic theory and start more arguments about whether the Fed controls rates or whether markets do (orthodox theory says markets control real rates and the fed only controls nominal rates, and thus inflation), and how savings demands respond to interest rates, and whether mortgages are risk free rates or not.
All of that complicates the simple picture I painted, but I think that picture is basically correct.
Suffice it to say that in terms of risk-free rates, the creditor's alternative is to buy a TIPS -- inflation protected bond -- which currently yields -1%
https://www.cnbc.com/quotes/US10YTIP
So we are living in a very low interest rate world right now.
Given that most likely your mortgage is government guaranteed (what mortgage isn't?) the entirety of the 3% you are paying is just as an inflation hedge plus some risk of pre-payment -- again, I have no idea what kind of points you have and the specific terms of the loan.
If inflation was believed to be zero, you could probably get the same mortgage for less than 1%, maybe even 0%.
We live in a world with very low real rates, but that does not mean that creditors don't take inflation risk into account.
TIPS have a yield that is referenced to the CPI (attempting to present a real yield), not a yield expressed in nominal dollars, so direct comparisons against mortgage rates (inherently nominal yield) are not very productive.
The close equivalent to the 30YR mortgage rate is either the 10-year Treasury (currently yielding ~+1.6%) or, if you insist on matching maturities, the 30-year (currently yielding ~+2.0%)
So, whatever risk premium the lender is demanding on a 0-points, 30-year fixed mortgage, it's a maximum of 1.4% (3.0%-1.6%). As a borrower, I'll happily take that deal.
that's canceled out by prices being higher because every other buyer has access to the same rates. Your monthly payments works out to be the same in the end because everybody bids up to the max they can afford.
Hard to predict, in general. Would you have predicted we’d be looking at 5% inflation right now, three years ago? We haven’t seen inflation like this in decades.
> That hurts debtors.
Only if they have variable-rate loans.
The broader point here is that it’s creditors (and the wealthy) who bemoan inflation the most because it means their rents are going to be worth less.
How? I'm pretty sure that is determined by the market. 10 year treasuries are yielding 1.587% which is less than inflation and people still buy them because your alternative is cash with even worse returns.
- lower middle class/poor: A cleaner working hand-to-mouth taking a payday loan isn't inflation hedging. She's paying through the nose for the privilege of a 33% loan because she's a risky debtor.
- middle class: I make money on my mortgage. I see my 1.22% 20 years fixed mortgage melt away against a salary that is raising with inflation. Plus I get rewarded by government with a tax deduction. Similar story for our rental.
- rich: Elon Musk can live off margin loans against a fraction of his investment portfolio if and when it makes sense.
The mortgage interest tax deduction only applies if you itemize, which literally 90% of people do not do as of 2019 IRS statistics. Effectively, there is no mortgage interest tax deduction for middle class since the 2017 tax cut ACA jobs act.
Wow, if you don't live in the US, where are you getting a 20 year fixed rate?
Honestly just curious as I thought those were really only a US thing.
Mind you, it's literally impossible to get evicted from your primary home here, which is presumably what drives the differences.
How does this work? Do they get a free house and a check cut monthly? Or is the mortgage cheaper than what it would have been?
Well:
> 2. How is the CPI market basket determined?
> The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought. There is a time lag between the expenditure survey and its use in the CPI. For example, CPI data in 2020 and 2021 was based on data collected from the Consumer Expenditure Surveys for 2017 and 2018. In each of those years, about 24,000 consumers from around the country provided information each quarter on their spending habits in the interview survey. To collect information on frequently purchased items, such as food and personal care products, another 12,000 consumers in each of these years kept diaries listing everything they bought during a 2-week period.
> Over the 2 year period, then, expenditure information came from approximately 24,000 weekly diaries and 48,000 quarterly interviews used to determine the importance, or weight, of the item categories in the CPI index structure.
* https://www.bls.gov/cpi/questions-and-answers.htm#Question_2
The BLS' CPI isn't written on some set of secret scrolls. If you're curious about how it is configured just look it up.
The BLS isn’t hiding this information, it’s publicly available. The burden of proof would be on you to provide research on why that methodology is incorrect.
https://www.bls.gov/news.release/cpi.nr0.htm
> The CPIs are based on prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living. Prices are collected each month in 75 urban areas across the country from about 6,000 housing units and approximately 22,000 retail establishments (department stores, supermarkets, hospitals, filling stations, and other types of stores and service establishments). All taxes directly associated with the purchase and use of items are included in the index. Prices of fuels and a few other items are obtained every month in all 75 locations. Prices of most other commodities and services are collected every month in the three largest geographic areas and every other month in other areas. Prices of most goods and services are obtained by personal visits or telephone calls by the Bureau’s trained representatives.
A lot of people take issue with hedonic adjustments, substitution threshold, etc - but the specific methdology used is far less important than the fact that they're simply lying about the data.
For one example, the obvious elephant in the room is the shelter category. In the last year, rents are up 12%[1], and home prices have soared nearly 20%[2]
Yet, from your own source, the BLS is claiming 3.2% for the shelter category.
It's not so much that the methodology is wrong (although that argument could be made as well), but that they're flat out lying.
And then you have to contend with the Gell-Mann amnesia effect: if they're lying to your face about the shelter category, what makes you think the data in any of the other categories, for which you have less third party data to corroborate, are not also completely fabricated?
[1] https://www.apartmentlist.com/research/national-rent-data [2] https://fred.stlouisfed.org/series/CSUSHPISA
1) The rent data you cite is for new leases. Since new leases only represent a fraction of total leases, they aren't going to agree with tracking overall rent.
2) When you buy a house, you get two things: shelter and an investment asset. The inflation statistics are only interested in shelter, not investments, so they disaggregate them. They do this by computing the rent for an equivalent dwelling. For this reason, the home price index won't agree with the inflation statistics either.
> 1) The rent data you cite is for new leases. Since new leases only represent a fraction of total leases
The vast, vast plurality of residential leases are for 12 months - and the vast majority are for 6, 12, or 18 months. So no, you're flat out wrong, here. We're talking YoY numbers, so these values reset literally at the end of the timeframe we're discussing.
> 2) When you buy a house, you get two things: shelter and an investment asset.
Cool. Home ownership is at a multi-generational LOW in the United States, with a huge proportion of the HN demographic comprising those currently priced completely out of this market. The OER metric weighting is not updated frequently enough to sufficiently account for this fact.
The reality is that between shelter, fuel, and food, our cost of living is skyrocketing on the order of 12% per year, and the CPI understates this for obvious political reasons. The real yield on a 10y treasury is about -10%, so it's no wonder that obvious scams like AMC, JPEG NFTs, and Shiba Inu (the coin, not the breed) are so popular. You reach for yield any place you can.
The median person does not see a 20% increase in housing prices if they are not currently purchasing a home. I have a 30-year mortgage and my housing costs have not increased since I purchased it. Add in the 65% home ownership rate and it isn't out of question that a large portion of the country isn't seeing as much housing inflation in their actual budgets.
Your source for rentals looks at the cost of new leases. The BLS methodology looks at the most recent rent of a sample of units, regardless of when the rent was set.
We would expect your source to report a higher increase, because its methodology is more responsive to short term changes. That does not show that the BLS is lying.
I wonder if they're able to discount this because the low interest rates mean that monthly payments have not increased 20% for most mortgage borrowers.
What goods, what weights, what substitutions?
The government has done this work and open sourced their calculations. Your unwillingness to accept it isn't proof that it doesn't exist.
To illustrate my point, here is a piece of the "Item replacement and quality adjustment" methodology. I cut it off where the table starts: https://www.bls.gov/opub/hom/cpi/calculation.htm#item-replac...
>Item replacement and quality adjustment
One of the more difficult problems faced in compiling a price index is the accurate measurement and treatment of quality change due to changing product specifications and consumption patterns. The concept of the CPI requires a measurement through time of the cost of purchasing an unchanging, constant-quality set of goods and services. In reality, products disappear, products are replaced with new versions, and new products emerge.
When a data collector finds that he or she can no longer obtain a price for an item in the CPI sample (often because the outlet permanently stops selling it), the data collector uses the CPI item replacement procedure to find a new item. Each priced item stratum in the CPI contains one or more ELIs. CPI commodity analysts have developed checklists that define further subdivisions of each ELI. When seeking a replacement in a retail outlet, the data collector first uses the checklist for the ELI to find the item sold by the outlet that is the closest to the previously priced item. Then the data collector describes the replacement item on the checklist, capturing its important specifications. The CA assigned to the ELI reviews all replacements and selects one of three methods to adjust for quality change and to account for the change in item specifications.
The following example describes the most common type of quality adjustment problem. Assume that a data collector in period t tries to collect the price for item j in its assigned outlet and is not able to do so because the outlet no longer sells this item. (A price for item j was collected in period t–1.) The data collector then finds a replacement item and collects a price for it. This replacement item becomes the new version v+1 of item j. The commodity analyst decides how the CPI treats the replacement. The commodity analyst has the descriptions of the two versions of item j. In addition, he or she has the t–1 price, , for the earlier version v and the period t price, , of the replacement version v+1. The following matrix displays the information available to the commodity analyst:
The "basket of things" is made from the ratios of things consumers buy. BLS explains the methodology and lists the basket, and how it evolves as people buy less horse carriages and more cars, less giant radios and more iPhones, and so on.
Making a basket that better represents inflation would be worth a lot of money, and a lot of groups try, but none really do any better than the BLS.
For example, the Billion Prices Project out of MIT tracks a vastly larger number of things, but ends up with the same inflation rates http://www.thebillionpricesproject.com/
https://www.bls.gov/cpi/methods-overview.htm
Ever consider you are special? If you’re posting on this site, chances are you are more educated, richer, and better employed than most of your compatriots in whatever country you’re in. Of course luxury goods inflate faster. We can afford it.
My personal observation on the snacks I buy: they are the same volume and taste mostly the same, but the ingredients shifted over time, in particular relating to flavor (e.g. less sugar and more "sugary stuff")
BTW In parallel they introduced "rich" versions that are more "luxury", clearly distinct from the standard product, and contain better ingredients overall. I'd expect a number of people to have switched to the pricer version, even if they were really seeking the "old" standard version.
And sometimes the content is actually superior. A US$ 30K nowadays is generally much better than a similarly priced car from 10 or 20 years ago. The iPhone was released in the United States in 2007 at the price of $499 for the 4 GB model and $599 for the 8 GB model: what kind of tech can you get for the same prices nowadays?
Everyone seems to ignore deflation, especially due to technology. This 1991 Radio Shack add illustrates the point quite well IMHO:
> There are 15 electronic gimzo type items on this page, being sold from America’s Technology Store. 13 of the 15 you now always have in your pocket.
> So here’s the list of what I’ve replaced with my iPhone.
> * All weather personal stereo, [*US*]$11.88. I now use my iPhone with an Otter Box.
> * AM/FM clock radio, $13.88. iPhone.
> * In-Ear Stereo Phones, $7.88. Came with iPhone.
> * Microthin calculator, $4.88. Swipe up on iPhone.
> * Tandy 1000 TL/3, $1599. I actually owned a Tandy 1000, and I used it for games and word processing. I now do most of both of those things on my phone.
> * VHS Camcorder, $799. iPhone.
> * Mobile Cellular Telephone, $199. Obvs.
> * Mobile CB, $49.95. Ad says “You’ll never drive ‘alone’ again!” iPhone.
> * 20-Memory Speed-Dial phone, $29.95.
> * Deluxe Portable CD Player, $159.95. 80 minutes of music, or 80 hours of music? iPhone.
> * 10-Channel Desktop Scanner, $99.55. I still have a scanner, but I have a scanner app, too. iPhone.
> * Easiest-to-Use Phone Answerer, $49.95. iPhone voicemail.
> * Handheld Cassette Tape Recorder, $29.95. I use the Voice Memo app almost daily.
> * BONUS REPLACEMENT: It’s not an item for sale, but at the bottom of the ad, you’re instructed to ‘check your phone book for the Radio Shack Store nearest you.’ Do you even know how to use a phone book?
> You’d have spent $3,054.82 in 1991 to buy all the stuff in this ad that you can now do with your phone.
* https://www.huffpost.com/entry/radio-shack-ad_b_4612973
That US$1600 Tandy 1600 runs a 286 CPU and has a 20MB hard drive, and supported 640×200×16 resolution (720×350 mode for monochrome monitors):
* https://en.wikipedia.org/wiki/Tandy_1000#Tandy_1000_SL_and_T...
What kind of system can you get for $1600 nowadays?
But well, you have to buy that phone eventually, right? So you take the best deal you can find, and stop worrying about it. That's the only sane way.
So in general - customers will delay purchases until the reasons they want to make the purchase outweigh the expected savings from delaying further.
I've also found the reverse to apply: for example, taking out a mortgage, I opted not to hurry despite fast-rising prices, because I judged the money saved on doing it earlier would not offset the mental cost of adding a house searching and mortgage process on top of two other highly-taxing life events.
The Osborne effect is a social phenomenon of customers canceling or deferring orders for the current, soon-to-be-obsolete product as an unexpected drawback of a company's announcing a future product prematurely. The term was coined in reference to the Osborne Computer Corporation, a company that took more than a year to make its next product available, and eventually went bankrupt in 1983.
That $1600 Tandy would equate to ~$3250 in Today's day and age.
So, essentially an M1 Pro/Max MacBook Pro.
I bought my 2003 VW Golf brand new from the dealer for CA$ 30K all-in, and after inflation that's the equivalent of about CA$ 40K nowadays. I'd get a pretty good car with much better tech and safety even for $30K, and could get something relatively fancy for $40K.
For example, you could argue that no one is harmed by Google's near-monopoly on search because consumer prices aren't going up (it's still free!). But if you consider data collected and time wasted scrolling past ads Google's services have been getting steadily more expensive for years.
Of course measuring these costs in an consistent, objective way is extremely difficult :(
Doesn't this sort of assume that the needs and wants of society stay consistent over time? I wonder if that is a valid assumption with how fast the world changes these days. For example, smartphones were hardly necessary 10 years ago, but now everyone needs one. And modes of transportation have changed: now we have Uber and a large number of electric cars, which wasn't the case 10 years ago. How could an index that includes things like the price of gas be an accurate measure, if society's needs are constantly in flux?
The basket can and does get adjusted.
For Canadians, StatCan has a "personal inflation" calculator where you can enter your own bills for their own basket of goods and services and get a personal number:
* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...
If people are ordering the same groceries then we should be able to make our own regional data plots.
We dont need the government for this. They need us to support them. And right now thats just this decade long debate about CPI and inflation, which is now accelerating due to the currency supply shock over the last year as people are converted into paying attention to this discussion.
I don’t care what a farrier charges to reshoe a horse or what a block of icebox ice costs, but I might have only 100 years ago. Surely we’d need a way to include entertainment and lifestyle changes as they happen. 1973 CPI didn’t include any costs for personal computers, Internet service, mobile phones, etc.
Also, consider that inflation numbers are necessarily lagging reality; they're not updated live by tracking residents or anything like that. For example, september's numbers are available and quoted above, but October's are not (and are projected to be higher).
This kind of conspiratorial thinking is harmful; it reduces trust, and thereby encourages everybody to skimp on the rules making everybody worse off. It's a classic prisoner's dilemma - we're better off just not playing that game. I'm sure the process of inflation-computation is imperfect, but let's talk about concrete, verifiable problems or better yet suggestions for improvements instead of nebulous feelings of disagreement.
By the looks of it, the official statistics confirm that inflation is spiking, but simply not yet to dramatic numbers (i.e. the kind of numbers that instantly change how we all think about money). If you feel that inflation is significantly higher, then why?
I'm searching that number and I can't find anything.
I found this, which is comparing the same quantities and has five pounds of meat. https://twitter.com/WhiteHouse/status/1410709115333234691
There's a bunch of complaints about other prices, and people pointing out the prices are up 8% since 2019, but I don't see anything about "cutting out all the meat" and I don't see the number 49 anywhere.
And the ground beef had the second biggest percent drop in price in that list, anyway.
Secondly, to somehow think 16 cents -- in the middle of a pandemic -- is worth a high-five, a bunch of jokes, and evidence that "the Biden economic plan is working" (what economic plan? nothing has passed yet), just shows that this administration is absolutely tone-deaf when it comes to the people it supposedly represents.
I think a mere "it hasn't gone up" would be a reasonable thing to be happy about among all the inflation. I wouldn't say "the Biden economic plan is working" about it but I feel like the criticism went to unreasonable places.
It's funny because the actual quote is stupid enough -- trying to emphasize some marginal rounding error national savings on 5 pounds of meat when the entire world has been exploded for the last two years is a baffling claim and an obvious attempt to put lipstick on the whole situation, these guys are absolute clowns, and the April-onwards hubris of "COVID's over, we saved the day!!!" is just a national embarrassment.
The specific "ban meat" bugbear has been a very active talking point among conservatives. You see, the Green New Deal (which is predicted in the book of Revelation) involves Andrea McDonald-Cortisol personally banning you from eating meat.
The ground truth at the heart of it is that the Green New Deal, which is as much an expression of intent as it is an actual policy document, correctly notes that cattle raised for beef contribute to greenhouse gasses (both through methane production, CO2 production, and clear-cutting of valuable carbon sinks to produce grazeland). This is of course indisputably true. The document doesn't actually prescribe any restrictions on meat so much as it acknowledges that the size of meat's contribution to our climate economics makes it unlikely we'll hit long term targets without rethinking our relationship with meat. Compound that with the fact that some liberals, including Barack Hussein Obama's awful wife!!!!, did initiatives like a "meatless monday", and you have all the proof you need that liberals are banning your meat.
It is less clear to me who is the first particular commentator to combine the "Biden is going to ban meat (and guns, and god, and everything else you hold dear, which is not a surprise because he stole the election, and he's senile)" argument and the "Biden claimed the 4th of July will be cheaper which is false because we have Zimbabwe level inflation" argument.
A few random sources of very concerned RW commentators talking about liberals taking away your meat, all before the present controversy:
https://www.washingtonpost.com/nation/2019/03/01/latest-righ...
https://www.washingtonpost.com/nation/2021/04/26/republicans...
https://edition.cnn.com/2021/04/26/politics/fact-check-biden...
Funny enough, I just noticed that your sources are liberals dunking on conservatives. Oh dear, this is as far deep down the partisan insanity of contemporary US discourse as I'm willing to go.
No where did I say I thought Biden was taking away my meats (smoked or otherwise), I’m not really sure how to respond to any of the other lies you posted about me but to call them outright lies that shouldn’t be part of any civil conversation between two human beings that don’t know each other. It strikes me that you came up with a conspiracy about me to lampoon right wing conspiracy theorists. Who really is more ready to believe lies?
I think what's going on here is a lot of profiteering because there's an easy way to raise prices without looking like a villain. More so than ever before, companies, suppliers, and stores can raise their prices arbitrarily, and easily blame the pandemic and "supply chain issues" without a huge amount of consumer blowback, especially from the upper classes.
I've been in the camp of price insensitive - to a degree - I buy things I'm used to and watch prices go up and up and up. Someone who is more savvy and perhaps open minded doesn't see such increases. So we both think each other are crazy when talking about expenditures.
That actually helps me understand both sides - so thanks for putting it plainly.
It's interesting to me to go back and reread all the replies with that mindset. Seems there is much disagreement as to which more accurately represents expenditures.
https://csimarket.com/Industry/industry_Profitability_Ratios...
Combine that with large grocery stores getting more data-driven it's kind of a no brainer for them to pick items they know they can increase the price of without blowback
Mom: "whelp, we tried the democrats and now my groceries are outrageous."
Gasoline, rent, shit service...it is not going unnoticed. I quit going to Starbucks because I had to wait a half hour for a simple menu drink every single time, busy or not. I can just stop going there...people can't stop buying cereal and milk, rather they won't and now have elevated expectations of government to control prices and their general well being.
Our supermarket expenses are the same as before, even slightly smaller. Our rent is the same although our landlord legally could have raised it if he wanted to.
All in all, we spend less money than before because:
- we don't commute, - we barely eat out, - we buy less clothes when staying home, - we travel a little less.
The last big purchase we made was a flat screen TV. It costed less than the 10 year old TV it replaced but is so much better.
Electricity and heat have gone up. That's all I see in our budget that has gotten more expensive.
There are purchases we haven't made because they are stupid expensive at the moment: We don't buy shares, we are postponing buying a house, and we have been postponing changing our car. I would have liked to buy a new laptop, but the specs of the new ones look like the 4 year old I have, so it feels wrong.
Could it be that we just have higher prices on some items and assets and that the CPI and mainstream economists are generally correct?
And before you ask: No, it's not because we switched from buying prepackaged/processed food to raw ingredients. We just order-out less.
Some of it might have to do with the fact that I live in Chicago, a major logistics hub, in a middle class neighborhood that has price-sensitive consumers and multiple major grocery stores.
Oats, deli meat, fruit, pasta, that's about it. Canned beans have gone up a little, maybe butter too.
The biggest factor for us is changing what we buy, not prices. Buying less alcohol and fewer pre-packaged foods has made a huge difference in our grocery bill.
I have tracked prices as well, and for me meat has gone 15%-20% up for chicken and pork, and over 30% for red meat.
I was tracking meat in the same places (Trader Joe, and Target) from late 2019 to now.
A normal steak, went from $10-$11/lbs to $15 or more
The cheapest one, went from $7.99 to $10.99/lbs
And file mignon went from $17 to $23-$25/lbs
Regular Chicken brseat went form $3.99 to $4.99/lbs, and organic one went from 4.50-5.0 to $6/lbs
We haven't seen the claimed inflation here.
https://www.kroger.com/p/simple-truth-organic-grass-fed-beef...
But you do mention travel and eating out. I think you would find if you tried to do the same amount of travel and eating out that you used to do, you would notice that you're getting less for your money than you used to in lots of little ways.
Sure, now that travel restrictions are causing less uncertainty and demand is ramping up, this might not be repeatable. Perhaps hotels are skimping, not sure as we stayed with family. Either way, there's always some subjectivity in use cases and that can easily tilt the scale one way or the other.
Inflation is measured by the price of a representative basket of products. And what’s reasonable to put in that basket today, might not be reasonable tomorrow.
If beef explode in price, people aren’t going to buy steaks, so maybe it makes more sense to change the index away from steaks to pork chops. It’s both a cop-out and the only reasonable thing to do.
The national isn’t poorer just because caviar went from almost free to extremely priced over a century.
Wouldn't it be lovely to have a web site under .gov where I can create my basket, and then I see my personal inflation?
Here is the one for Germany: https://www.destatis.de/DE/Service/Statistik-Visualisiert/pe...
But yes, the basket should be public information.
At least I can’t figure out how to game it meaningfully.
Many industries and businesses do this.
Adding housing maintenance, heating, water supply, etc. - the entire housing category climbs up to 17.8%. Which sounds like a totally reasonable estimate to me - young people and urbanites pay more, older folks and people in rural or provincial towns pay much less. From my personal experience - housing and related expenses were ~50% of my income while paying down mortgage, down to ~7% after the loan was repaid
The CPI doesn’t reflect your personal preferences. It’s an average across the entire country. Have you ever known the entire country to agree on anything?
Apparently, this exists and it's called CPI-U but alas it still apparently understates inflation.
> Mr. Powell used a gauge from the Dallas Fed that throws out the top 31% and bottom 24% of personal consumption expenditure (PCE) price changes, and was bang on the Fed’s 2% year-over-year target in July, the latest available. An alternative measure from the Cleveland Fed strips out the top and bottom 16% of consumer-price index changes, and was far higher; worse, the monthly rate was unchanged in August from July, giving no support to the idea that inflation is already coming back down. [0]
The rationale is valid though. Price-conscious consumers would simply switch brands, stores, or even go for substitute goods if the price of a particular product they chose happened to skyrocket for no reason while the price of all other alternatives barely changed.
Similarly, if the price of beef permanently puts it out of reach for my family, then I absolutely would call foul on substituting it from my basket of goods. That would be inflation, and excluding beef would be gaming the system.
The problem is that determining between these cases is very hard to do in the moment, and only becomes obvious in hindsight.
It really is valid. Not only is it valid, it's precisely the whole point of tracking a consumer price index. The goal of CPI is to track the prices of goods and services consumed by the population, not brand- or product-loyalty. When prices go significantly up, it's a known fact that consumers react by seeking affordable alternatives, or in the case of luxury items simply going without.
Every year one of these increases in price by 20%. A different one every year, cycling between them all. So every 10 years, they all increase by 20%, an effective inflation rate of about 1.8%.
We have a price index based on a basket of these goods. At the start of year 1, our basket contains equal quantities of all the goods. In year 1, the price of good #1 abruptly goes up 20%, having been stable for the last ten years. OK, we say, this is a thing that's experiencing some sort of anomalous increase in price, so we'll take it out of the basket. At the end of the year, we look at our basket of goods 2..10. The prices haven't increased at all! Zero percent inflation! Splendid.
At the start of year 2, our basket contains equal quantities of goods 2..10. In year 2, the price of good #2 abruptly goes up 20%, having been stable for the last ten years. Another anomalous increase. Better take this one out of the basket too. At the end of the year, we look at our basket of goods 3..10. The prices haven't increased at all! Zero inflation again.
At the start of year 3, our basket contains equal quantities of goods 3..10. In year 3, the price of good #3 abruptly goes up 20%, having been stable for the last ten years. Dang, better take this one out of the basket. Our basket is getting a little short of this kind of good. Hey, good 1 has been stable for a couple of years after its blip in year 1, let's put it back in. At the end of the year, we look at our basket of goods 1,4,..10. The prices haven't increased at all! Zero inflation.
And so we continue. Each year we remove an item that obviously doesn't belong in the basket because it's suffered an anomalous increase in price, so of course consumers will be switching to something else. Sometimes we put back in things that have been stable for a while. Every year we get an inflation figure of zero.
And yet, somehow, ten years after we started all the prices are 20% higher. How on earth did that happen?
You're right, I suppose the homeless don't experience inflation in housing costs, therefore it doesn't exist!
This is as beautiful as the NSA's redefinition of surveillance whereby they only collect _all_ the data they can. But it's not surveillance until they look at it, which they assuredly don't because there's so much of it.
But if they track the price change in 1 brand of spaghetti, treatment of 1 broken arm, and 1 million-transistor CPU? Those aren't goods that can substitute for one another.
No, quite the opposite in fact. CPI is a accurate measure of inflation as it tracks how much the real-world consumer prices vary where it really matters: real-world consumer expenses.
Perhaps the mistake you're making is assuming wrongly that demand for specific brands/makes/models is perfectly inelastic and consumers do not change their consumption patterns at all even if their price increases so much that they can no longer afford them. Meanwhile, if a low/middle class family sees the price of stake skyrocket, you can bet they'll start to switch a few meals to hamburguers or hotdogs.
If food gets more expensive and people don't spend more on food then inflation didn't happen by definition. They still spend the exact same amount after all, they just got different food instead.
That’s clearly absurd, and so defining inflation in a way that means it never happens when people substitute goods is also clearly absurd.
http://www.shadowstats.com/alternate_data/inflation-charts
This is occasionally mentioned in the news:
1. Take ShadowStasts claimed inflation (dig, you'll find their historical graph), which they generally have much higher than BLS rates, and take BLS rates, and compute the compounded inflation over say 20-30 years.
2. Pick a decent batch of things you buy: housing, rent, food, gas, cars, etc. (making your basket of goods - scale according to what you spend on them, like a normal basket of goods would do)
3. Find ads from now and from the start of the timeframe. Gather prices. Put in Excel or Google Docs
4. See which is more accurate: BLS or ShadowStats.
5. Conclude ShadowStats is absolute nonsense, and ban it from your thinking, since you just proved to yourself it is nonsense. Reading it makes one significantly less connected to demonstrable reality.
The first time I did this it was amazing how far ShadowStats was from reality. I've been recommending this to friends for years - most realized what nonsense it is and learned to see if there's simple ways to check things themselves. And this is an easy test anyone can do with a little effort.
Amusingly, highly educated people who are disdainful of anti-vaxers or Gwyneth Paltrow quackery can easily believe that inflation is an order of magnitude higher than officially reported, or that they the evil/incompetent bureaucrats leave out food, shelter, healthcare and/or energy costs from the calculation or some such.
As an academic economist turned machine learning/SWE, I'd say there are plenty of knowledgeable people around on HN, but on matters of economics and health, the signal-to-noise is definitely much lower than on anything related to computers.
It's why I love such clean examples as the Shadowstats nonsense. It's completely debunkable in an hours work.
No, I'm serious. If these numbers were accurate then you wouldn't even be able to make money off the stock or housing market. Everyone would be losing money.
The irony of ShadowStats:
> So, here we are 3 years later and the price for a Shadow Stats subscription still hasn’t budged! At $175 for a year long subscription, you still get the same Shadow Stats. The cost of the subscription has remained the same even as inflation has moved higher. So, in real terms, there’s actually been deflation in the cost of a Shadow Stats subscription.
* https://www.pragcap.com/update-theres-still-deflation-in-hyp...
That was written in 2014. It's now (late) 2021 and and the price is still $175. :)
Because this sounds like exactly what's happening.
Aside from rent, the only things I’ve noticed significant price changes in have been items undergoing acute supply shocks, such as lumber. And most of those have calmed down since mid last year.
Saifedean Ammous writes about this in his new book, the Fiat Standard. The chapter about fiat food is available online. [0]
> So what is the government reporting?
In addition to CPI, the government also reports CPI-E for elderly consumers. It is generally higher than the more widely used standard CPI (all urban residents).
They report things that make them look better. Generally that makes inflation look lower than it is.
For what it's worth, I'm fairly young but I have similar issues to yours. If you mostly buy essentials, the costs have been rising very fast, much faster than salaries do for the same functions.
In the last 2 years it's _noticeable_ and painful.
I think inflation was pretty steady up until about 2019. Then it went insane.
If I had to pick an average, 3 or 4% until aforementioned year.
I’ve always disliked this, but shocks to those markets keep them excluded.
But it's important to distinguish between a house and housing.
A house is a capital good that provides housing/shelter. So if the prices of houses got really expensive but rent stayed the same that wouldn't show up as inflation.
No, it doesn't. In the US, the US Bureau of Labor Statistics explicitly includes food and rent in it's CPI.
The only fast solution here is subsidizing living which many governments are doing but it won't fix the problem they created in the first place and now they have to deal with either dramatically raising rates and saddling the people with horrendous debt due to bond yields and defaulting, etc or riding it out and lying about real inflation with small raises.
I think food prices are being inflated simply by more people having more money to spend (pandemic unemployment/stimulus, higher wages for some).
1) PRIMARY factor. The rent is too damned high. It has been and people have been cramming together like sardines; but just like the car rush as PPE bubbles, now people want all the housing everywhere even MORE than the last 30-50 years when it wasn't being built sufficiently to accommodate demand by jobs.
2) The lowest end workers finally got enough of a lifeline, even if only for a short time, to realize how badly they were underpaid and how much they need to really have a modestly OK life. Combine with all the services that let them work in the first place (care for children, like daycare and schools) unable to provide due to the pandemic and this is hard-stalled between less workers and workers who hold out for more in what is finally a sellers market.
3) I don't have first hand observational data on this, but my gut feeling is that it's harder for businesses that used to do under the table work with citizens / undocumented immigrants to fully staff, and all the more likely for the pandemic to harm tightly packed workers in processing places. It would be nice to hear more about documented guest worker programs that legitimize migrant worker practices, while also ensuring that they're paid enough to discourage undercutting the local job market.
I'll also note: Rent affects the businesses too... and food prices might go up based on their (mistaken) belief that consumers can afford to pay more. I have cut back to lower quality options and rarer treats for some options in the last half year as prices have risen past the points I'm willing to buy at.
The logistics problem is continuing to spiral, ships backed up are now not returning on time so factories are backed up and forced to shutdown production.
People not in production and logistics are severely underestimating how bad this is going to be. This is the beginning of the shortages.
I do not, hence my problem with the reporting.
And as far as your rent going up by 30%, that's offset by some people whose rent actually went down by a lot during the early pandemic when people were fleeing the cities and bargains were to be had. And some people who don't pay rent at all, but pay fixed-rate mortgages which will go up by zero percent over the life of the loan. So you can see how that could significantly nerf the total inflation affecting that household.
Either it's a Swiss thing, or because we buy the majority of food semi-directly of organic farmers and prices haven't changed that much in this sector.
If your issue with the reporting of a statistic is that your personal anecdote disagrees with it, then you should probably look for more evidence.
PPI(~10%) is a late stage measurement that doesn't avoid geopolitics. However, because of government policies it's said to have become useless. Yet still considered better than cpi.
Oil as a measure. When geopolitics are screwing with it, everyone knows. It's under immense abuse right now. Yet it's recent low because of covid was ~$20/barrel and it's up to ~$83. Or if you account for covid, it's up ~30%.
M2 money supply? It's got 40% inflation locked in, but that wont show up in a single year.
Call me crazy but PPI seems on the money. Geopolitics seems to be the biggest player in the game right now.
Even if that were true, how does that knowledge help? Legal fights of that nature take resources and time, which most people don't have.
Department of Commerce/Consumer protection in Australia.
They'll give basic advice and you can attend a Magistrates court for more difficult issues for a nominal fee.
The exact mechanisms behind something like CPI are probably secret to prevent manipulation by outsiders, but I also suspect it's difficult to even confirm that.
If you open the link you shared, you can see they make hedonic adjustments for men's suits, the first item in the list. Are suits today really much higher quality than they were 10 years ago, necessitating a decrease in the actual price inflation of a man's suit? The fed thinks so, but they don't share the details of why or how much hedonic adjustment men's suits deserve.
https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
The government tries to guess which prices ratchet only up (e.g. new cars) and which prices rise and fall (e.g. gasoline). They then report the inflation rate on the ratcheting goods only, because that should be more predictive of what's going to happen in the future.
BLS: Sep 2020- Sep 2021, all items : up 5.4%
[https://www.bls.gov/news.release/cpi.t01.htm]
On that chart, fossil fuels are much higher up.
Looks like 2022 social agency dispersals will be up about nearly 6%.
Yeah I remember when I was living under a bridge and then decided to invest in Real Estate.
Renters have a greatly impaired ability to build wealth. If everyone has to rent except "investors" then there is no more middle class. In a market that is majority renters landlords can raise rent until it consumes virtually all surplus:
https://en.wikipedia.org/wiki/Law_of_rent
The CPI is correct as the CPI is defined, but that's circular. I can index inflation to the number of nose hairs in the President's nose if I want. The question is whether it's a meaningful statistic for driving a policy that benefits anyone except the government or the financial industry.
The CPI should include the cost per square foot of residential real estate. It should also be weighted heavily toward necessities like food, energy, education, and health care, which perhaps coincidentally are hard to outsource and therefore are more directly influenced by domestic inflation.
CPI is heavily weighted toward necessities like food, energy, education, and health care. You would know that if you bothered to read the documentation.
Other websites follow that [0] and interestingly enough, median inflation adjusted price per square foot across the entire country hasn't really budged in decades although covid could have messed that up these pasts 2 years. Of course, if you want to live in a geography constrained location like the west coast and northeast, that does not really help you but you need to work with their local governments as that is a local problem and not a federal one.
[0]: https://www.supermoney.com/inflation-adjusted-home-prices/
In practice, people buy houses both as an investment and a shelter. So the CPI attempts to ignore the portion of the purpose that functions as an investment.
Really, in the era of fractional shares and low/no-cost brokerages? Renters can build wealth by purchasing assets, just like anyone else.
And the monthly cost of mortgages went down over the 2000s:
* https://awealthofcommonsense.com/2021/03/what-if-housing-pri...
https://www.bls.gov/regions/west/news-release/consumerpricei...
Note that the CPI in the SF bay area has been >2% for over a decade and has been 3-4% since 2016.[1] This is noticeably higher than the national rate of <2%.[2] Until 2020, that is, when CPI dropped in the SF bay area but skyrocketed nationwide.
[1] https://data.bls.gov/timeseries/CUURS49BSA0&output_view=pct_... [2] https://www.bls.gov/charts/consumer-price-index/consumer-pri...
> 11. How are CPI prices collected and reviewed? BLS data collectors visit (in person or on the web) or call thousands of retail stores, service establishments, rental units, and doctors' offices, all over the United States to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. We record the prices of about 80,000 items each month, representing a scientifically selected sample of the prices paid by consumers for goods and services purchased.[1]
> The CPI survey collects about 94,000 prices per month to compute indexes for commodities and services. Approximately two-thirds of price collection in the CPI is done by personal visits of CPI data collectors to brick-and-mortar stores. The remaining data are collected by telephone or on the outlet’s website. In some cases, these data are supplemented by data provided from other sources. The outlets where prices are collected are selected based on data from the CE survey. These outlets may be brick-and-mortar stores or websites (e-commerce); currently, about 8 percent of CPI quotes are collected from outlet websites.[2]
This seems easily biased and inefficient when considering theoretical alternatives.
1. https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...
What possibly leads you to believe that aggregating the price of 80k items from different markets is something that can be easily biased?
A 1lb ribeye steak in 2017 was about 11 dollars. Today it's 17 dollars, in bulk.
If you want to look at 'cheap' things, just look at the printed price of Santitas chips.
CPI actually claims meat and poultry inflation is 10.5% (https://www.bls.gov/cpi/, click Food -> Food at home -> Meat and poultry), so that's not far off eitherr.
I don't think there's any lying going on. It's just that not everything is inflating at 10.5%, and the CPI is just one number describing the whole economy, and you probably mostly notice the things inflating the fastest.
With all due respect, is it lost on you how utterly ridiculous this statement is?
If all the products have increased in price then inflation is higher than reported.
So higher inflation in premium goods is seen as a crisis. Notwithstanding how fast we'd cook the planet if everyone demanded ribeye every week...
A particular consumer's habit of consuming very specific high-end goods or services which is immune to substitute goods is not how inflation is determined. It would make as much sense as claiming inflation skyrocketed because you only wear Air Jordans and the latest model is sold for around $200 while last year they sold for $120.
If we talk US current official status is:
----------------------------------
"In July 2021, the Consumer Price Index increased 0.5% from June to July, slower than the 0.9% month-over-month increase from May. When compared to the year prior, the full index increased 5.4%, making it the largest 12-month increase since 2008."
----------------------------------
"Consumer Price Index (CPI)"
https://www.investopedia.com/terms/c/consumerpriceindex.asp
CPI stat from the U.S. Bureau of Labor Statistics:
https://www.bls.gov/charts/consumer-price-index/consumer-pri...
"Consumer Price Index Frequently Asked Questions"
https://www.bls.gov/cpi/questions-and-answers.htm
"How is the CPI calculated?"
"The CPI is a product of a series of interrelated samples. First, using data from the U.S. Census we select the urban areas from which data on prices are collected. Next, another sample (of about 14,500 families each year) serves as the basis for a Telephone Point-of-Purchase Survey (TPOPS) that identifies the places where households purchase various types of goods and services, forming the basis for the CPI outlet sample. Using data from the Consumer Expenditure Survey, BLS statisticians assign quotes in the CPI item categories to specific outlets. A specific item is then chosen for selection using a process which bases the probability of selection for an item on the share the item composes within the outlet’s revenue in that item category."
"Recorded price changes are weighted by the importance of the item in the spending patterns of the appropriate population group. The combination of carefully selected geographic areas, retail establishments, commodities and services, and associated weight, gives a weighted measurement of price change for all items in all outlets, in all areas priced for the CPI."
There is also the PCE running at almost 5%:
https://www.bea.gov/data/personal-consumption-expenditures-p...
"Personal Consumption Expenditures Price Index"
"CPI vs. PCE Inflation: Choosing a Standard Measure"
https://www.stlouisfed.org/publications/regional-economist/j...
"Two different price indexes are popular for measuring inflation: the consumer price index (CPI) from the Bureau of Labor Statistics and the personal consumption expenditures price index (PCE) from the Bureau of Economic Analysis. Each of these is constructed for different groups of goods and services, most notably a headline (or overall) measure and a core (which excludes food and energy prices) measure. Which one gives us the actual rate of inflation that consumers face?"
For that to be true, on average the price of every single item in your groceries list has to increase over 20%.
Can you provide a single example of an item in your groceries list whose price increased over 20% during 2021? And which item increased in price the most?
I wouldn't be surprised if supply chain issues (e.g., with trucking companies) are partly responsible for the price rises.
Now, you could reasonably make the case that we should therefore expect future non-energy inflation to follow since energy is a cost in pretty much every step along the supply chain. And that's fair! ...but it's not a sign the official figures are fudged either; after all, it takes time to collect figures, and it takes time for retailers and everyone along the supply chain to update their prices. Given an energy price spike, it's totally normal to see the energy price inflation spike a short time (1-2 months?) later when the figures are next updated, and then see goods inflation spike (less highly) a month or two after that. If everything aligns perfectly and businesses and data collectors act quickly, maybe a little more quickly - but never immediately.
So we should expect to see e.g. gas prices rise first, and then other goods, all while not yet immediately being represented in official figures.
If, after a few months, a perceived price spike wasn't captured by the official figures, then it's time to start worrying - and even then, not every worry turns out to be founded.
And gas goes up and down for a variety of reasons.
*Here in Los Angeles there's a handful of gas stations that inexplicably charge $1-$2 more than any other one. I always assume it's either money laundering or they just prey on people who aren't paying attention. $4.19 is just the cheapest price I've driven by in the last 24 hours
To the extent that's true (and its a rather including incomplete story) as an intermediate cause, those policies themselves exist to meet federal pollution mandates, which California has, and even moreso in the last had, particular population and geography challenges with, particularly in the LA basin.
My rent has gone up 30%. What used to cost me 100 something in groceries now regularly goes into the 200s.
I'm nothing if not an observationalist, but this CPI is horse dung.
For someone like my family, I wouldn't believe any number less than 20%.
The sad thing is, I've never talked to a single friend or family member that said otherwise.
So what is the government reporting?