Latest Inflation Numbers and Discussion

[Montecfo]

I wonder if most people don't tip well for those folks who push. We tip WELL. If other people tip as we do, I'd think there would be folks lined up for that j*b. YMMV

As a teen some of my friends pushed wheelchairs at the nearby airport. Due to the tips it was considered a good and relatively easy job.

 

[Koolau]

As a teen some of my friends pushed wheelchairs at the nearby airport. Due to the tips it was considered a good and relatively easy job.

I thought maybe that was the case. I wouldn't have wanted to do it, but I think it must be a good gig, financially.

 

[GenXguy]

Clearly the rate of change can go up or down. Over the long run most things cost more than 5 years ago even if they went down this year.

I think more to about 3 years back to 2020 before massive inflation really raised the price of everything. Almost everything is higher now. Sure there are sales, but there were sales back then also. And I don't think anyone said that prices of absolutely everything will never go back down. I know I have said multiple times that as long as there is any inflation, prices on average will continue to go up as the previous inflation is already baked in, and positive inflation means further price increases on average. And I always said that there could be exceptions, but I don't know of a single thing that I buy which is cheaper today than it was in Feb 2020, prepandemic. Many things are up 40% or so during that time, including my big expenses like homeowner's insurance. Even gas prices are back up to $4/gal here ($5+ some places). The last I saw, the inflation Core PCE was still over 200% of the Fed's target rate, so they still have a lot of work to do. True inflation tends to be more than the official figures, to boot.

Since people focus on expense they forget that incomes are also higher than 5 years ago.

No, they don't forget, but it's likely not true for them or isn't relevant. Wages actually have made inflation worse. Many do not have wages, and not everyone with wages is seeing wage growth, and especially not to equal the combined high inflation, often 20%, sometimes 40%+, that is already baked in to prices over the last 3 years. And if you're not working anymore and relying on your savings/investments, most people took a big hit in your purchasing power if you were earning typical CD rates of less than 1% after taxes while prices went up 20% or more, plus stocks are still down from levels they reached about 2 years ago as prices have continued to go up. So, it's still a bad situation, and it will continue to be bad after inflation is under control because higher prices are mostly baked in. The purchasing power is lost. It's a different world today. Inflation needs to get under control to keep it from getting exponentially worse. Just the sad reality.

 

[DJRR]

No, they don't forget, but it's likely not true for them or isn't relevant. Wages actually have made inflation worse. Many do not have wages, and not everyone with wages is seeing wage growth, and especially not to equal the combined high inflation, often 20%, sometimes 40%+, that is already baked in to prices over the last 3 years. And if you're not working anymore and relying on your savings/investments, most people took a big hit in your purchasing power if you were earning typical CD rates of less than 1% after taxes while prices went up 20% or more, plus stocks are still down from levels they reached about 2 years ago as prices have continued to go up. So, it's still a bad situation, and it will continue to be bad after inflation is under control because higher prices are mostly baked in. The purchasing power is lost. It's a different world today. Inflation needs to get under control to keep it from getting exponentially worse. Just the sad reality.

Of course, everyone is different. In my case my salary is up 46% in 3 years, my SIL is up 80%, daughter #1 50%, daughter #2 75% so things are great. It was extremely easy to change jobs for higher salary or get higher salary to keep key people from leaving. My emergency fund now gets $200 per month interest vs. $4 per month 3 years ago.

My point was only that on a whole, prices can go down on an inflation adjusted basis. For ex Gas is much cheaper than it was 30 years ago on an inflation adjusted basis. Utilities were a huge % of our budget in the 70's and I got yelled out for leaving the lights on. Today it is a nit vs. my salary. Hours worked to purchase is the relative metric to me. Housing, cars, and childcare went crazy but most other things are not that bad.

 

[Marc]

Of course, everyone is different. In my case my salary is up 46% in 3 years, my SIL is up 80%, daughter #1 50%, daughter #2 75% so things are great. It was extremely easy to change jobs for higher salary or get higher salary to keep key people from leaving. My emergency fund now gets $200 per month interest vs. $4 per month 3 years ago.

My income is down 100% in last six years; everyone is different and those of us retired don't really care whether salaries have kept up.

Marc

 

[NW-Bound]

Since people focus on expense they forget that incomes are also higher than 5 years ago.

No, they don't forget, but it's likely not true for them or isn't relevant. Wages actually have made inflation worse. Many do not have wages, and not everyone with wages is seeing wage growth, and especially not to equal the combined high inflation, often 20%, sometimes 40%+, that is already baked in to prices over the last 3 years. And if you're not working anymore and relying on your savings/investments, most people took a big hit in your purchasing power if you were earning typical CD rates of less than 1% after taxes while prices went up 20% or more, plus stocks are still down from levels they reached about 2 years ago as prices have continued to go up...

Yes.

It has been said that inflation redistributes wealth from the retirees to the workers.

When this retiree read that some years ago, he sat upright and took notice. He has not forgotten.

 

[Fermion]

My income is down 100% in last six years; everyone is different and those of us retired don't really care whether salaries have kept up.

Marc

I care, not for being jealous of current workers, but in order to gauge how much costs are going to increase for us in the future. I do not trust government projections as much as some do, so when I see relatively high salaries for somewhat unskilled positions, I start to think what this might mean for future cost of goods.

 

[CaptTom]

These folks need to open the pdf and scan the table. Takes 1 minute to get perspective.

Good point. But where I take exception with your previous post is the idea that those goods you mentioned are "down." OK, the rate of inflation is down. Some prices have retreated a bit from their pandemic and supply-chain peaks. But overall, prices are still historically very high across the board.

The day-to-day fluctuations are of great interest to pundits tryin to sell content. But the weekly grocery tab and prices on all the other everyday products we buy are what people really care about.

As you say, there needs to be some perspective. Looking at individual goods over short time windows is not really informative.

 

[JoeWras]

Good point. But where I take exception with your previous post is the idea that those goods you mentioned are "down." OK, the rate of inflation is down. Some prices have retreated a bit from their pandemic and supply-chain peaks. But overall, prices are still historically very high across the board.

The day-to-day fluctuations are of great interest to pundits tryin to sell content. But the weekly grocery tab and prices on all the other everyday products we buy are what people really care about.

As you say, there needs to be some perspective. Looking at individual goods over short time windows is not really informative.

Fair point, I used a broad word. I think without exception I was referring to "down month over month". Year over year, they were mostly not down.

 

[DJRR]

My income is down 100% in last six years; everyone is different and those of us retired don't really care whether salaries have kept up.

Marc

I get it, but I did not think this was the "my personal inflation" rate discussion. I am just trying to think why the economy has not collapsed as many expected and trying to highlight possible reasons.

Many low wage people are doing better. My SIL went from making $12.50/hr with no benefits to making $22 per hour with full benefits. He will never afford a house on that salary, but his standard of living has definitely increased and he has increased his spending.

Retirees got an 8.3% SS increase and massive increase in interest on their savings. Many have more savings due to Covid shut down limiting spending and government tax rebates, etc. Many have paid off houses drive less, have no childcare, etc. so their personal inflation rate can be much lower. This can be increasing consumer spending. Many are getting small/medium inheritances as the population ages. I know several whose parents have recently died in their 90's leaving houses and 6 figure inheritances.

Consumer debt is up. This could be troubling, but if people are using their higher income to increase their consumption with "monthly payments" consumer spending will be up. Longer term could cause a contraction if interest rates stay elevated.

For the future corporate wages will be interesting to watch. In my company salaries were held to a 3% increase at the corporate level. However, my group had unfilled positions so key performers got much more to keep them happy and not looking even though the total budget was reasonable. I guess that means we increased productivity, but if we actually need to hire those people to make our targets then things will start to heat up.

Things just seem complex and some of the paradigms from the past are not working so well from a macro economy and investment perspective.

 

[GenXguy]

Of course, everyone is different. In my case my salary is up 46% in 3 years, my SIL is up 80%, daughter #1 50%, daughter #2 75% so things are great. It was extremely easy to change jobs for higher salary or get higher salary to keep key people from leaving.

Those are anecdotes, and they don't match what I'm hearing from the average person or seeing statistics for in the news. Even in my skilled trade, my salary increases over the last 3 years did not match government inflation figures, let alone my higher actual experienced inflation (based on prices, not consumption). And those with decent savings saw a massive loss of purchasing power over the last few years, despite possibly getting a 5% wage increase, which still kept them well below inflation over 3 years. And changing jobs is often not an option or a very good one, like for me during my last few years before retirement in a specialized job which was vested with good benefits, despite low pay raises vs. skyrocketing inflation.

My point was only that on a whole, prices can go down on an inflation adjusted basis. For ex Gas is much cheaper than it was 30 years ago on an inflation adjusted basis. Utilities were a huge % of our budget in the 70's and I got yelled out for leaving the lights on. Today it is a nit vs. my salary. Hours worked to purchase is the relative metric to me. Housing, cars, and childcare went crazy but most other things are not that bad.

Gas is about double now what it was just a few years ago, which is the time period we are talking about, not 30 years ago when cherry-picking a specific spike in prices. I remember when gas was so cheap that it was insignificant. Not so today! I used to not give my utilities much of a thought years ago, and now I'm stuck with $70 admin fees just for having electric service before I use my first kwhr. I cringe every time I review my utilities, insurance, property tax bill, etc.

 

[GenXguy]

Retirees got an 8.3% SS increase and massive increase in interest on their savings

They didn't get this over the last 3 1/2 years when inflation hit 9%+ while most CDs were paying as much as 1% or less after taxes, far less than inflation was eroding the value. Only in recent months, are the post-tax CD interest rates closer to the Core CPE rate, which still isn't making up for everything lost and still losing to inflation in most cases.

Many have more savings due to Covid shut down limiting spending and government tax rebates, etc. Many have paid off houses drive less, have no childcare, etc. so their personal inflation rate can be much lower. This can be increasing consumer spending. Many are getting small/medium inheritances as the population ages. I know several whose parents have recently died in their 90's leaving houses and 6 figure inheritances.

Staying home due to the pandemic and tax rebates, driving less, not having child care is different than the high inflation of prices, although rebates certainly helped cause more inflation. Just because you inherited a house or large savings doesn't mean you are doing better because of inflation - it's not related. That's like saying you won the lottery, thanks to inflation. lol

My income is down 100% in last six years; everyone is different and those of us retired don't really care whether salaries have kept up.

Marc

Yeah, in fact, I would rather salaries stay down, to help keep inflation lower.

 

[Koolau]

Just ate at one of our favorite mainland restaurants. From last year, it appears that prices are up about 30%. I asked about it and the waitress indicated that they finally had to raise prices. They'd try to hold the line for several years, but finally had to raise their prices. Customers were down from previous years. YMMV

 

[MichaelB]

Those are anecdotes, and they don't match what I'm hearing from the average person.

In other words, someone else’s anecdotes don’t match your anecdotes.

Remember, inflation is a broad, overall increase in prices. Overall wages and total cost of employment have definitely risen along with inflation.

 

[GenXguy]

Just ate at one of our favorite mainland restaurants. From last year, it appears that prices are up about 30%. I asked about it and the waitress indicated that they finally had to raise prices. They'd try to hold the line for several years, but finally had to raise their prices. Customers were down from previous years. YMMV

30% in one year - not surprised. I don't eat out a lot, but I've noticed things seem to have gone up significantly as well, sometimes double. So, I've really cut back eating out even more. It sounds like people are looking for a new favorite place.

 

[GenXguy]

In other words, someone else’s anecdotes don’t match your anecdotes.

Right, I was speaking about the average person, though, not cherry picking extremes. I had read statistically that wages were up much less than the figures the other poster gave, not necessarily people I knew personally.

 

[Koolau]

Right, I was speaking about the average person, though, not cherry picking extremes. I had read statistically that wages were up much less than the figures the other poster gave, not necessarily people I knew personally.

I think what is undisputed is that on average, wages have not kept pace with recent inflation. Not anecdotal.

 

[cyber888]

I think you are comparing the pandemic lock-up period where everyone was locked-up in their homes during the pandemic, and no one was driving on the road except to buy essentials.

And today is summer season where gas prices go up by 20% -30% as people travel during summer. As they say, this is revenge travel, where people are booking vacations and driving and flying everywhere.

This is a very poor comparison of 2 very different situations. Gas prices go up based on seasonal demands for summer travel, and this is a post-pandemic period.

Your anecdotes are just anecdotes, and nothing more. Prices have gone down. Eggs are much cheaper, 30% cheaper. Bacon is 20% cheaper, My Coffee Cream is 20% cheaper, etc.

Those are anecdotes, and they don't match what I'm hearing from the average person.

Gas is about double now what it was just a few years ago, which is the time period we are talking about, not 30 years ago when cherry-picking a specific spike in prices. I remember when gas was so cheap that it was insignificant. .

 

[Montecfo]

Can we not do this every single thread?

Can we just talk about inflation? Without saying prices are "skyrocketing" ad infinitum?

It has gotten very repetitive to say the least.

Is it that hard to remember 15 years of very mild inflation but not possible to forget a relatively short period of higher than recent average inflation?

Some perspective is in order.

 

[aja8888]

Today I went to buy a set of tires for the SUV. My shop has been Discount Tire for 30 years now and I have bought tires for many, many cars and trucks. Last set I bought of this tire size was $562.00 installed (we looked it up). No extra road hazard insurance bought at the time.

That same set (essentially), today, was $802.00 with no extra road hazard insurance. Both sets were Falken tires with the same size, stats, and warranty.

Yikes!

Another observation: That store has always been packed with people, no matter what day or what time you went. Today, it was literally empty. I had an 11:00 appointment and they took me at 10:15 when I arrived. I was gone in 20 minutes.

Maybe this was a fluke?

 

[GenXguy]

I think you are comparing the pandemic lock-up period where everyone was locked-up in their homes during the pandemic, and no one was driving on the road except to buy essentials.

Actually, I wasn't. I specifically mentioned February 2020 as my comparison point in an earlier post, before all the inflation changes, which was before all the lockdowns here.

Gas prices go up based on seasonal demands for summer travel, and this is a post-pandemic period.

That's actually only one of the things that affects gas prices. And we weren't in pandemic lockdown in Feb 2020. It came a bit later.

Your anecdotes are just anecdotes, and nothing more. Prices have gone down. Eggs are much cheaper, 30% cheaper. Bacon is 20% cheaper, My Coffee Cream is 20% cheaper, etc.

Eggs are cheaper from the Avian flu spike, but they are still up from Feb 2020 when I was always paying less than $1 for a dozen. Bacon is up from then also. And I buy coffee creamer regularly, and it's at its highest price I've ever had to pay for it, and it's the same national brand and size at a chain supermarket.

 

[Free To Canoe]

Today I went to buy a set of tires for the SUV. My shop has been Discount Tire for 30 years now and I have bought tires for many, many cars and trucks. Last set I bought of this tire size was $562.00 installed (we looked it up). No extra road hazard insurance bought at the time.

That same set (essentially), today, was $802.00 with no extra road hazard insurance. Both sets were Falken tires with the same size, stats, and warranty.

Yikes!

Another observation: That store has always been packed with people, no matter what day or what time you went. Today, it was literally empty. I had an 11:00 appointment and they took me at 10:15 when I arrived. I was gone in 20 minutes.

Maybe this was a fluke?

No fluke. Bought tires 6 months ago and my results were similar. Maybe Discount Tire is not such a discount any more.

 

[GenXguy]

Can we just talk about inflation? Without saying prices are "skyrocketing" ad infinitum?

I said skyrocketing inflation, not prices, but it was referring to a 3 year period, and I think I said it one time anytime recently. It wasn't saying that anything is "skyrocketing" presently, either.

This is the inflation thread after-all.

But relax, it's just at term, same as massive inflation. You can use different ones if you like.

Also note that those 12 years of so called "mild" inflation were more "target" inflation, not that they were too low or deflation. It would take many years below 2% inflation over this time period to average out to the target 2% rate. Those high years bring it up the average for a long time.

 

[MichaelB]

I think what is undisputed is that on average, wages have not kept pace with recent inflation. Not anecdotal.

According to BLS and Fed data real wages are higher today compared with prepandemic levels. They jumped early in the pandemic, then dropped, stabilized, and since early ‘21 have been growing.

 

[aja8888]

No fluke. Bought tires 6 months ago and my results were similar. Maybe Discount Tire is not such a discount any more.

I check Costsco (more expensive), Walmart and online stores. All about the same price. Remember, most tires are not made in the U.S. anymore....maybe Goodyear still has one operating plant in the Midwest.