"Biflation"

[traineeinvestor]

And yet wine prices have remained pretty flat here in PA. Thank the heavens for state run liquor stores!

It depends which wines you are looking at. At the mass market end of the industry, excess supply has driven prices down. In HK we also had the benefit of scraping the 70% duty which used to apply.

At the top end, the prices just keep going up:Liv-ex: The Fine Wine Exchange

It's well past the stage where the wines I purchased year's ago for future drinking are now too expensive to feel comfortable drinking :-(

Prices for this year's en primeur were insane.

 

[John Galt III]

Don't forget junk food inflation. Has anyone else noticed that the bargain basement store brand of junk food is either disappearing, or soaring into the infinite? My favorite local pretzels just aren't there any more. I used to get 3 pounds of great pretzels for $2.29. ( Forget about 10 years ago when they were just 69 cents for a 3 pound bag ) Now my store brand is totally gone and the other stuff is all way over $1 a pound. For junk food !

I now get my pretzels at a Dollar store. I get a 12 ounce bag for $1. Unbelievable.

BTW, my wages have been static since I started my current job 4 years ago.

Perhaps the new masses of folks existing on unemployment compensation and government subsidies are all out there dulling their pain with massive doses of junk food ( and beer) , driving the price up.

 

[Gone4Good]

"With biflation on the other hand, the economy is tempered by increasing unemployment and decreasing purchasing power"

"In economics, the term stagflation refers to the situation when both the inflation rate and the unemployment rate are high. "

Is there a difference? Seems to me Biflation is a rename of Stagflation.

No. Stagflation happens during periods of actual inflation. Bi-flation, on the other hand, apparently is a phenomenon experienced by those who always see rampant inflation, even when prices are falling.

 

[samclem]

No. . . . Bi-flation, on the other hand, apparently is a phenomenon experienced by those who always see rampant inflation, even when prices are falling.

No. "Bi-flation" is a phenomenon experienced by those who purchase primarily basic goods. This "basket" (composed of staples and essentials) is a selective subset of the "basket" used to compute CPI and many other measures of consumer prices, and therefore we should not be surprised if the inflation amount is different between these two "baskets."

 

[REWahoo]

I see biflation as a condition where the stuff we consume (food, fuel, drugs, toilet paper...) goes up in price (or just as frequently, shrinks package quantity) while assets (stocks, real estate,...) decrease in value. Not something imagined, something actually occurring.

Speaking of shrinking package quantity, I ran across this: Scott Toilet Tissue

Scroll down and check out the product reviews from customers...

 

[Htown Harry]

Great find!

-1. No offense intended, I'm just applying some skepticism here.

I've spent an hour googling for the biflation term's "creator", his company, his paper, etc. Also I tried checking out the references in the Wikipedia entry.

Result: dead ends and circular references back to the Wikipedia article by bloggers.

I can find nothing that says this theory has any legitimacy to it, at least by conventional measures.

Other than this thread, of course. There's always cutting edge discussions of macroeconomic theory here at ER.org

Just to clarify, I think there's some merit in this concept and it's a fun topic. But let's not get too carried away, however, by thinking we've discovered a hidden key to explaining the current disorganized state of the U.S. and world economies.

 

[FIREd]

I have built a "biflation" scenario in my FIRE plan.

For example, say my retirement income is $60K, including $30K for essentials and $30K for discretionary. If one year I give myself a 3% COLA, most of the 3% x $60K = $1,800 increase in annual income is expected to go to essentials ($31.8K, a 6% increase) and none to discretionary expenses (still $30K). Over time, more of our income will go to pay for essentials and less for discretionary expenses. I am OK with that.

I think that taxes could be the most inflationary item in my budget right now.

 

[avengerki]

Wouldn't the price of items which are nonessential but which may bring solace in tough economic times - be dependent on what you could carry while still able to ride the bike

Nah since if you are determined what you can't carry on bike you can take a bus and walk with. I once walked 4 miles with a 36" TV since it was on sale and I had no car and no tv having just moved to a new place and decided to leave the car at home and had not moved anything else up.