Latest Inflation Data and report

[tmm99]

Sorry if someone else has already asked this - Does SS increase in accordance with the inflation fairly accurately? That would certainly help the people who are on SS benefits already.

 

[jazz4cash]

I am simply amazed at how blasé people seem to be about 7%+ inflation. The rule of 72 tells me that in a mere 10 years, my dollars will lose half their value. Not so good. Yet, there seems to be no outrage, no concern, not much of anything.

Do you think we'll see 7% annually for the next 10 years?

 

[marko]

I am simply amazed at how blasé people seem to be about 7%+ inflation. The rule of 72 tells me that in a mere 10 years, my dollars will lose half their value. Not so good. Yet, there seems to be no outrage, no concern, not much of anything.

I agree but wonder if everyone is distracted by other things. "An extra 20 bucks to eat out?! Yahoo! Let's go! At least we can eat out again!"

We've had $4 gas before and nobody seemed to drive less. I think it's all getting absorbed by the credit cards so a reaction to all the higher prices may take a while to sink in. Of course those living on the edge were on the edge before all of this but even if they're outraged, nobody hears them.

Personally it bothers me more in theory than practically. If the groceries or gas go up 10% or 15% a week I just shrug it off to a bad week and move on

 

[GenXguy]

Sorry if someone else has already asked this - Does SS increase in accordance with the inflation fairly accurately? That would certainly help the people who are on SS benefits already.

Unfortunately, the Medicare insurance premiums (such as 14.5% for Part B this year) including supplemental coverage, higher drug costs, and other out of pocket costs absorb any increase in the SS benefit and then some, so those people are really feeling it, leaving even less of the SS left to pay for their other expenses, and factor in that many people of SS age have moved to more conservative investments like CD's that are paying a fraction of 1% at the same time they are seeing their costs increase far more than the government CPI levels, so their savings is losing value quickly as well, if they even have any. These are hard times.

The average beneficiary will receive an extra $93 a month. After subtracting their higher expenses, not just for Part B, but for everything else with today's high inflation, they are falling further behind. Dark days, indeed if you don't have a nice retirement savings or other income other than SS. And even if you do, the average net SS dollars remaining will actually be worth LESS than before the COLA adjustment when figuring in those dollars are worth 7.5% less.

 

[GenXguy]

Fortunately I have not had any need for home maintenance as I bet that has shot through the roof.

Someone else mentioned some of the things affecting me much more than the government 7.5% level, plus I experienced a big increase in my insurance premiums through work, plus the deductible increased significantly, and natural gas bills are up 30% or so this winter.

But regarding the need for home maintenance, appliances, or new cars in any particular year, I see comments from people saying that the higher costs of those things doesn't affect them because they didn't do any last year or don't plan to this year, but I don't put those expenses only into the year that I actually purchase them, but I use sinking funds so that those expensive purchases are budgeted over many years. Instead of $15,000 roofing job being allocated to one year, I factor that in over 20 years, and for a car, I spread it out over 10 years, for the new HVAC system, over 15 years, also other home maintenance items such as flooring, deck, appliances. And in my case, I had been putting off these things for years until I was to FIRE, so some are definitely overdue and are needing done sooner than later, but I'll still spread the higher costs over a period of years in my budget, and with those things being hit so hard by inflation, I've had to increase my sinking fund budget quite a bit to cover the increased costs of all of these more imminent needs along with accounting for higher costs further down the road.

The big point is that I budget for all those long term high expenses every month of every year, even though some may only come around every 20 years or so, and those things are up much more than the government CPI figure.

Food price increases are all over the place. The regular price of bacon is up 40% over the last two years. The bread I buy is up 25% recently. The apples I buy are up about about 30% over the last two years. I dread getting groceries as there is something else that's jumped in price with every trip. I've been hit hard on home insurance cost increases - over 12% last year - about 3 months from getting this year's bill. Property taxes are very high in my state, and they are paid around the middle of the year following the year when they are accrued, so I don't know how hard I'll be hit there.

I'm regularly seeing comments from people that state they cut their expenses and that they aren't seeing inflation. If someone cuts their consumption so that their overall expenses are lower, that doesn't mean they aren't experiencing inflation. One type of inflation happens to be shrinkflation. You're getting less for your money, even if you're not spending more.

 

[JoeWras]

We've had $4 gas before and nobody seemed to drive less.

"nobody" is a pretty absolute.

The demand tangibly drops off when gas prices go up. I'm not a commodity nerd, so I can't point you to charts, but the nerds always have them.

Personally, in that $4 gas time, I took the bus a whole lot more instead of driving. It cost me an extra hour per day, but I used it to do reading.

 

[Mulligan]

Someone else mentioned some of the things affecting me much more than the government 7.5% level, plus I experienced a big increase in my insurance premiums through work, plus the deductible increased significantly, and natural gas bills are up 30% or so this winter.

But regarding the need for home maintenance, appliances, or new cars in any particular year, I see comments from people saying that the higher costs of those things doesn't affect them because they didn't do any last year or don't plan to this year, but I don't put those expenses only into the year that I actually purchase them, but I use sinking funds so that those expensive purchases are budgeted over many years. Instead of $15,000 roofing job being allocated to one year, I factor that in over 20 years, and for a car, I spread it out over 10 years, for the new HVAC system, over 15 years, also other home maintenance items such as flooring, deck, appliances. And in my case, I had been putting off these things for years until I was to FIRE, so some are definitely overdue and are needing done sooner than later, but I'll still spread the higher costs over a period of years in my budget, and with those things being hit so hard by inflation, I've had to increase my sinking fund budget quite a bit to cover the increased costs of all of these more imminent needs along with accounting for higher costs further down the road.

The big point is that I budget for all those long term high expenses every month of every year, even though some may only come around every 20 years or so, and those things are up much more than the government CPI figure.

Food price increases are all over the place. The regular price of bacon is up 40% over the last two years. The bread I buy is up 25% recently. The apples I buy are up about about 30% over the last two years. I dread getting groceries as there is something else that's jumped in price with every trip. I've been hit hard on home insurance cost increases - over 12% last year - about 3 months from getting this year's bill. Property taxes are very high in my state, and they are paid around the middle of the year following the year when they are accrued, so I don't know how hard I'll be hit there.

I'm regularly seeing comments from people that state they cut their expenses and that they aren't seeing inflation. If someone cuts their consumption so that their overall expenses are lower, that doesn't mean they aren't experiencing inflation. One type of inflation happens to be shrinkflation. You're getting less for your money, even if you're not spending more.

Yes definitely “personal inflation” can be contorted if they substitute, etc. I think the govt bakes that into their food CPI also if I am not mistaken (off my weak memory, granted).
Cars are a unique thing. If you just were buying or a 300k rust bucket to trade, yes the inflation hit someone hard. But for me, I got lucky. Used cars went up more than new ones have, so I actually made money on my trade in. Remember the old rule, your car loses 10-15% the minute you drive it off the lot? For me it was, drive it for 3 years put 40k on it and trade it in for about 115% of your purchase price. So in this situation I loved inflation because it hit the late model used cars more than the new cars (or at least for my Blazer I bought I should say).
I caught a heck of a break last month. Getting off my $700 Obamacare plan with 7k deductible and getting on my GF plan that is $150 or so cost for her with $200 annual deductible, vision and dental (which I had none). Though that is a huge savings for me its not truly deflation, its opportunity…However, ironically in my state, if I had stayed on Obamacare, my premium was going to go down $1 dollar from last year. So there would have been no inflation in health care premiums which would have been a miracle, since I dont think it ever happened before.

 

[VFK57]

I hope that many people, including myself, are wrong about high inflation stays with us for a long time. However, there are many factors what are pointing to it for the foreseeable future. Factors like: 1 Massive increase in money supply by printing and having not enough produced goods/services to support it. 2. National Debt has crossed $30 trillions with no way ever to repay it without "high inflation", 3. the Feds balance sheet is at all times high, 4. there is proven breakage of supply chains (some people say it is temporary, while other state that it is political) but shortage of goods like new cars, some appliances (I ordered a new GE electric drop in range in late September 2021, but received it last Friday with $160 jump in original price). How we could fix it while most of supplies come from China with a lowest labor cost? Shifting manufacturing to other low cost labor countries is not so fast and easy.

 

[Major Tom]

With inflation, I don't know how long TJ can keep selling the 2 buck chuck bottles.

It's been 3 buck chuck elsewhere outside of CA for many years. Is it still $2 in CA?

2 Buck Chuck has been 3 Buck Chuck here in the SF Bay area for a while now, though I still call it 2 Buck Chuck! The first shock was a few years ago, when it went to $2.49. Now it's $2.99. I don't have a good recall of the timeline, as I rarely drink these days, but it hasn't been $1.99 here for a few years.

 

[marko]

"nobody" is a pretty absolute.

Sorry. Meant nobody I know.

 

[daylatedollarshort]

I'm regularly seeing comments from people that state they cut their expenses and that they aren't seeing inflation. If someone cuts their consumption so that their overall expenses are lower, that doesn't mean they aren't experiencing inflation. One type of inflation happens to be shrinkflation. You're getting less for your money, even if you're not spending more.

If your expenses are already pretty low, you may not have many opportunities for cuts that don't impact your quality of life. But we seem to have a never ending list of projects for lower overhead with the same or higher standard of living. Like last year we refinanced the mortgage when rates dropped, DH found a cheaper hair stylist, we switched Internet providers to get the new customer rate, we got a lot of our household goods and gifts from a product review program, qualified for a senior discount pass for the commuter train, and a bunch more that added up.

Some grocery prices are up but no so much at the discount stores and sales prices seem to be the same as they have been the last few years.

 

[Teacher Terry]

Reading this thread got me thinking that I have been coping with increasing expenses by lowering others such as phone, cable and taking a higher deductible and lower pay out on my doggy insurance.

I have a permanent denture attached to implants that they remove yearly to clean underneath. The cost doubled to 700 and that’s with my cash discount otherwise it’s 840. I am now going to do it every 2 years.

My Maltese usually get a yearly dental but now the cost if they don’t pull teeth doubled to 600. I have 2 dogs and now will do it every 2 years. So I guess it is affecting me.

 

[GenXguy]

I hope that many people, including myself, are wrong about high inflation stays with us for a long time. However, there are many factors what are pointing to it for the foreseeable future. Factors like: 1 Massive increase in money supply by printing and having not enough produced goods/services to support it. 2. National Debt has crossed $30 trillions with no way ever to repay it without "high inflation", 3. the Feds balance sheet is at all times high, 4. there is proven breakage of supply chains (some people say it is temporary, while other state that it is political) but shortage of goods like new cars, some appliances (I ordered a new GE electric drop in range in late September 2021, but received it last Friday with $160 jump in original price). How we could fix it while most of supplies come from China with a lowest labor cost? Shifting manufacturing to other low cost labor countries is not so fast and easy.

And don't forget the higher wages and fuel costs feeding into it. This feeds into higher costs, and I don't see people suddenly getting pay cuts in the future, and in some cases, higher minimum wages are forcing up wages even higher. It's not just the lowest wage earners' pay that goes up when that happens.

I was looking at refrigerators last summer as I had one fail and am using a temporary smaller one. Due to the supply and backlogs, I decided to hold off in hoping the availability and prices would improve, but it looks like they are up about 15% more since then. Argh.

 

[Sunset]

Sorry if someone else has already asked this - Does SS increase in accordance with the inflation fairly accurately? That would certainly help the people who are on SS benefits already.

Yes.


The part B health insurance also will rise, but it's a small amount each month, compared to SS, so basically the answer is yes

 

[Koolau]

I am simply amazed at how blasé people seem to be about 7%+ inflation. The rule of 72 tells me that in a mere 10 years, my dollars will lose half their value. Not so good. Yet, there seems to be no outrage, no concern, not much of anything.

So far, my outrage has been reserved for those who first suggested inflation didn't really exist, then that it was temporary and then some even suggesting it was a "good thing." I notice folks who used to say such things have been mum on inflation of late but YMMV.

 

[marko]

I'm regularly seeing comments from people that state they cut their expenses and that they aren't seeing inflation. If someone cuts their consumption so that their overall expenses are lower, that doesn't mean they aren't experiencing inflation.

Yes, but to me the criteria--at least here--is how it impacts a retiree's withdrawal rate. If by some way you can maintain your lifestyle while holding your WR, inflation doesn't matter all that much.

Personally, we had been on a spending tear since 2018 in building a new house. With that behind us now, we're seeing our lowest spending (extrapolated for the year) in 5 years. That, and DW hitting Medicare next year has me buying MacCallan instead of Johnny Black.

 

[Badger]

We haven't been able to spend much in the past couple of years so that the money we didn't use will take care of inflation for a while yet. If it continues after that then we continue with our lifestyle (it is still frugal and needs and wants are few) and inflation will eat into the grown children's inheritance. In the meantime we will continue with maximum annual gifting to each of them. When CD rates go up sufficiently we will buy some long term for the time when they go back down again.


Cheers!

 

[Magus]

So far, my outrage has been reserved for those who first suggested inflation didn't really exist, then that it was temporary and then some even suggesting it was a "good thing." I notice folks who used to say such things have been mum on inflation of late but YMMV.

And those same people are now suggesting inflation is about to turn the corner with zero evidence for that as well. I realize to some degree they (Gov, Fed Reserve, etc) have to do that or inflation really will get out of control but still.

I think a lot of white collar workers and wealthier retirees have not felt the pain of inflation as much due to less going out to eat, less traveling and not having to drive to work much since working remotely, especially if you got lucky and no major healthcare bills the last couple years and havent had to make any major purchase like a new car or buy your first home (and helps if you are very flexible on food based on price, if pickier not as lucky with price increases). They do come across as tone deaf.

(to be fair, inflation at 3-4% instead of 1-2% probably would have been a good thing in aggregate for a year or so, but 7.5% really at 11% adjusting housing to what it is really up y/y is not healthy for anyone)

 

[Magus]

High inflation though is a game changer compared to previous recession. (Since 1982).

Why would values of good companies that can easily raise prices go down when cash is rapidly losing it's value? Same applies to housing market.

Yup - nationally housing prices went up quite a bit from 1981 to 1985.

 

[Magus]

Scariest part of high inflation is the recession that usually follows and with loss of value in hard assets and the stock market. But we know how to prepare for this opportunity, right?

This is usually the case but sometimes in inflationary recessions values still go up, just the nominal increase in below the real increase - this was the case at the end of Carter/early Reagan for example and happened in hyper-inflationary countries recently like Venezuela.

This is a tricky situation because a lot will depend on what the Fed and Fed Gov does over the next year or two. Raising rates 100 bps (which has effectively already happened with US Treasuries in last 6 months) is one thing - but pulling half the $4.5 in QE it added out of the system would make a deflationary event - or they could continue add $ to the system if the market gets shaken a bit and continue the push towards even more inflation. Many in government still want to spend trillions more which would add to inflation as well while others want to raise taxes which would do the opposite. Will workers continue to be able to demand higher wages here with the tight labor market (inflationary) or will a lot of workers come off the sidelines soon (deflationary)?

This is why I like owning liquid cash and Residential real estate in addition to stocks and some short term/intermediate bonds, along with a small hedge of gold/silver/crypt. The range of potential outcomes over the next 3 years is significantly higher than normal standard deviation IMO.

 

[Freedom56]

We noticed that supermarket grocery prices are 40-50% higher in Palm Beach County Florida versus Los Angeles County California. Even items such as coffee (Lavazza) is about 40% more expensive in Florida on sale versus sales in California on sale. This holds true even comparing price for meat, fish, dairy products at Costco also between the two states. However, we have not seen empty shelves at supermarkets in either state.

The Federal Reserve can raise rates only so much. There is over $30 trillion in national debt that has to roll over. Until the government starts paying down debt, which does not appear to be any time soon, the cost of servicing the debt will increase to a point where there will be no choice but to raise taxes (revenue).

https://www.usdebtclock.org/

 

[Magus]

We noticed that supermarket grocery prices are 40-50% higher in Palm Beach County Florida versus Los Angeles County California. Even items such as coffee (Lavazza) is about 40% more expensive in Florida on sale versus sales in California on sale. This holds true even comparing price for meat, fish, dairy products at Costco also between the two states. However, we have not seen empty shelves at supermarkets in either state.

Having worked high up at a HQ for a reasonably large size grocery chain that had stores all over the SE, Midwest, Mid-atlantic, Texas and California, and have seen industry data, on average there is almost no price difference between Florida vs California in the supermarket industry. YMMV obviously by what items you buy, which stores you shop, whether you hit sales up or not etc but on average - ie a Publix vs a Albertsons or Ralphs - will not be that different on the 20k items they carry. Even a WFM on average is only about 20% higher than a regular grocery chain, although some items can be much higher.

 

[ShokWaveRider]

Honestly, we have not "really" noticed inflation impacting our spending. Mind you we do not eat out that often, we fill up the car once or twice a month at most, but we do buy the same groceries as we usually do.

Electricity is on equal billing; water did go up a little as did gas. Total monthly increase is about $30, as far as we are concerned, not even a blip. Home size is ~3,300sqft with 2 AC units.

Now, if we were w$#king, commuting etc., it would be different, but we are not.

The only thing that would make life better is if we could downsize our home by ~1,300 sqft. But if we sold, we would have to find somewhere to go, which is what puts us off.

 

[Freedom56]

Having worked high up at a HQ for a reasonably large size grocery chain that had stores all over the SE, Midwest, Mid-atlantic, Texas and California, and have seen industry data, on average there is almost no price difference between Florida vs California in the supermarket industry. YMMV obviously by what items you buy, which stores you shop, whether you hit sales up or not etc but on average - ie a Publix vs a Albertsons or Ralphs - will not be that different on the 20k items they carry. Even a WFM on average is only about 20% higher than a regular grocery chain, although some items can be much higher.

Here is a dose of reality. Two weekly ads for rib steak from two large supermarket chains: Publix in Florida and Stater Brothers in California.

The price for rib steaks (bone in and on sale this past week):

$6.99 at Stater Bros in Los Angeles County California
$9.99 at Publix in Palm beach County Florida

Price difference: 42.9%

There prices are similar at Vons/Safeway in California (another large supermarket chain).

We have residences on both coasts and have noticed a significant difference in food costs between Florida and California since 2011 when we purchased our condo in Florida.

I could go on and on about the price differences between Florida and California. Beer and wine are significantly less expensive in California. There is a much better selection of produce in California than Florida and at much better prices. Milk and cheese are about 30-40% less expensive in California. Our perspective is not from HQ offices but the consumer who actually purchases these items.

 

[ShokWaveRider]

Here is a dose of reality. Two weekly ads for rib steak from two large supermarket chains: Publix in Florida and Stater Brothers in California.

The price for rib steaks (bone in and on sale this past week):

$6.99 at Stater Bros in Los Angeles County California
$9.99 at Publix in Palm beach County Florida

Price difference: 42.9%

There prices are similar at Vons/Safeway in California (another large supermarket chain).

We have residences on both coasts and have noticed a significant difference in food costs between Florida and California since 2011 when we purchased our condo in Florida.

I could go on and on about the price differences between Florida and California. Beer and wine is significantly less expensive in California. There is a much better selection of produce in California than Florida and at much better prices. Milk and cheese are about 30-40% less expensive in California. Our perspective is not from HQ offices but the consumer who actually purchases these items.

Publix prices are the most expensive in the area. I recently purchased great T-bone Steaks and NY Strips for $4.99. All relative.