Latest Inflation Numbers and Discussion

[explanade]

Eggs are down to $1.75 a dozen for Large Eggs.

Large organic brown eggs at Costco are still $7.99 a dozen or more depending on brand.

IIRC though, some of those brands were $6.99 and up before the pandemic.

 

[Montecfo]

I went through the 70's. All this inflation builds on that inflation and all of the inflation since the 70's.

Of all the news and conversation I've heard about this massive inflation we've had in the last few years, over 400% of the target rate year over year for a while, I don't think I've ever heard anyone use the word "mild" to describe it. It's cost me a "multiple" of $100,000's in purchasing power in quick order. That's not something easily planned for.

My plans were to have well in excess of what I've needed. I don't want to go backwards in standard of living and plans for retirement, so that's why I'm working longer, not because of any lack of planning. I've been saving 80%+ some years.

Nitpick the words if you wish. Fed funds rate peaked at 20% then which is of course 4x the current rate.

Highest peak in the 70s was 14% and average was almost 7% for a decade.

Our last decade averaged under 3% through 2022 including the skyrocketing prices. We averaged 7% exactly one year.

If no one else has attempted to provide needed perspective then I am glad to be able to.

Hard to plan for? Perhaps. Yet resilient plans are not optional.

Part of the good news is inflation also inflates equity results, which have beaten inflation handily over time. So you can't look at this loss of purchasing power in a vacuum.

Things are not as bad as they sometimes seem.

 

[Navigator]

Nitpick the words if you wish. Fed funds rate peaked at 20% then which is of course 4x the current rate.

Highest peak in the 70s was 14% and average was almost 7% for a decade.

Our last decade averaged under 3% through 2022 including the skyrocketing prices. We averaged 7% exactly one year.

If no one else has attempted to provide needed perspective then I am glad to be able to.

Hard to plan for? Perhaps. Yet resilient plans are not optional.

Part of the good news is inflation also inflates equity results, which have beaten inflation handily over time. So you can't look at this loss of purchasing power in a vacuum.

Things are not as bad as they sometimes seem.

Thanks, Montecfo. This puts the last couple of years in perspective.

 

[GenXguy]

Nitpick the words if you wish. Fed funds rate peaked at 20% then which is of course 4x the current rate.

Highest peak in the 70s was 14% and average was almost 7% for a decade.

Our last decade averaged under 3% through 2022 including the skyrocketing prices. We averaged 7% exactly one year.

Not nitpicking, but you are now talking about fed funds rates, which I never mentioned. I was talking about inflation, which had been more than 400% of the target 2% rate. That is NOT the federal funds rate - that is not nitpicking.

If no one else has attempted to provide needed perspective then I am glad to be able to.

You haven't provided anything new to me. I follow this stuff all the time. I know what's it done to people and how it has devalued my retirement savings.

Hard to plan for? Perhaps. Yet resilient plans are not optional.

Again, I did have a large buffer in my plans. The point is I want to get back to the preferred retirement standard I was planning for prior to the massive inflation.

It is a fact that it would take years of 0% inflation to make up for the high inflation of the last 2 to3 years.

Part of the good news is inflation also inflates equity results, which have beaten inflation handily over time. So you can't look at this loss of purchasing power in a vacuum.

No, that's actually more BAD news for me. My home's value is actually down here. I don't live in a high cost of living area. Home prices have not gone up here. I've mentioned this in other thread. I could not sell my house for as much as I paid for it years ago, yet my property tax is up 85% and homeowner's insurance more than double what it was when I purchased the home despite doubling the deductible. So, try again. lol

Things are not as bad as they sometimes seem.

No, they are WORSE than they seem to be to you or for you. But to many of us, they are very bad and costing us "years" to make up for the difference, although many people will never make up for the difference.

Not sure what you and some others benefit from by trying to downplay the effect on inflation. This isn't political for me, but I guess that could be a motivation for some people.

 

[Gumby]

MODERATOR NOTE - feel free to disagree with each other's facts or analysis, but please don't make it personal. That's how threads get closed.

 

[Chuckanut]

I certainly hope inflation continues to fall. I have my suspicions that going into an election year the FRB will be under pressure to ease up too early.

Now excuse me while I listen to some music. I have to choose between It's All Over Now or Bad Moon Rising. Not sure what to pick.

 

[Koolau]

I certainly hope inflation continues to fall. I have my suspicions that going into an election year the FRB will be under pressure to ease up too early.

No, no, no, no. The FRB is independent*. So unless you plan to borrow money, I'd be playing "Everything's Coming Up Roses."













*

 

[Montecfo]

Not nitpicking, but you are now talking about fed funds rates, which I never mentioned. I was talking about inflation, which had been more than 400% of the target 2% rate. That is NOT the federal funds rate - that is not nitpicking.

You haven't provided anything new to me. I follow this stuff all the time. I know what's it done to people and how it has devalued my retirement savings.

Again, I did have a large buffer in my plans. The point is I want to get back to the preferred retirement standard I was planning for prior to the massive inflation.

It is a fact that it would take years of 0% inflation to make up for the high inflation of the last 2 to3 years.

No, that's actually more BAD news for me. My home's value is actually down here. I don't live in a high cost of living area. Home prices have not gone up here. I've mentioned this in other thread. I could not sell my house for as much as I paid for it years ago, yet my property tax is up 85% and homeowner's insurance more than double what it was when I purchased the home despite doubling the deductible. So, try again. lol

No, they are WORSE than they seem to be to you or for you. But to many of us, they are very bad and costing us "years" to make up for the difference, although many people will never make up for the difference.

Not sure what you and some others benefit from by trying to downplay the effect on inflation. This isn't political for me, but I guess that could be a motivation for some people.

I mentioned the Fed Funds rate to help provide much needed perspective. It was 400% higher than it is now, which reflects how much more serious inflation was then compared to now.

And to be clear I have posted nothing but facts.

And not trying to convince you, but understanding the comparison of today's inflation to that of the 1970s is completely apples to oranges. And it is passing as all the stats now indicate.

But individual economic situations vary widely. I am not intended to minimize yours.

All the best!

 

[Chuckanut]

No, no, no, no. The FRB is independent*. So unless you plan to borrow money, I'd be playing "Everything's Coming Up Roses."
*

Well, they can still be under pressure even if independent. IIRC, back in the 70's and 80's they were also under pressure as we went through stagflation. I am thankful we don't have that now. And, I don't want to see a return of stagflation. My guess (which is worth every cent people have paid me for it ) is that they will hold things steady for a year or two.



Given that today's rates are more normal for my lifetime than the previous ultra-low rates, I don't have a big problem with them.

 

[Koolau]

Well, they can still be under pressure. IIRC, back in the 70's and 80's they were also under pressure as we went through stagflation. I am thankful we don't have that now. And, I don't want to see a return of stagflation. My guess (which is worth every cent people have paid me for it ) is that they will hold things steady for a year or two.



Given that today's rates are more normal for my lifetime than the previous ultra-low rates, I don't have a big problem with them.

Agreed. Especially since I don't plan to obtain a mortgage any time soon (ever.)

 

[Chuckanut]

Here’s an opinion piece from today’s WSJ on why we are on our way to deflation. I don’t necessarily agree, and offer this article only as another point of view to ponder.

https://www.wsj.com/articles/get-re...iyaz25obo6dae28&reflink=article_copyURL_share

A few quotes since it’s behind a paywall:

“To understand why, remember that the Fed didn’t cause the current bout of inflation. We’ve had zero interest rates before and held them there for 3½ times as long without inflation (2008-15). We’ve had quantitative easing before too, representing a larger share of the economy, and we kept it up for five times as long without inflation (2009-17). The record increase in the money supply caused by $6 trillion in pandemic relief payments in 2020 and 2021 unleashed the present inflation.”

“In the fourth quarter of 2021 the Fed was still saying inflation was “transitory.” It didn’t lift off from two years of zero interest rates until March 2022—and that was a mere 25-basis-point hike. The Fed didn’t really get into inflation-fighting mode until June 2022, with the first 75-basis-point rate increase—the same month inflation peaked at 9.1%. If the historical norm of approximately a 1½-year lag between policy and result holds, then we haven’t begun to see any effects the Fed’s actions have had on inflation since it started hiking rates 14 months ago.”

“Slowing money growth now is interacting with higher rates, and the result is contraction. M2 has shrunk 4.63% in the past year. This is the only contraction in U.S. history, so there is a lot we can’t predict here, but it would be extraordinary if such a contraction didn’t result in deflation, just as the large money-supply increase two years ago resulted in inflation.”

 

[GenXguy]

I don't really buy the deflation predictions, but even if we did have a little deflation, it would never make up for the massive inflation we've had over the last 3 years which is still wayyyy over the target inflation rate, so I'm certainly not worried about deflation and doubt will see any meaningful and real deflation to speak of.

 

[Dash man]

I don't really buy the deflation predictions, but even if we did have a little deflation, it would never make up for the massive inflation we've had over the last 3 years which is still wayyyy over the target inflation rate, so I'm certainly not worried about deflation and doubt will see any meaningful and real deflation to speak of.

I understand the price of eggs are down. That’s a big deal in our home! [emoji28]

 

[JoeWras]

I'll believe in general deflation, or at least sub 2% inflation, when workers stop just walking out on jobs and going across the street for $1 rise in pay.

DW went to the mall for the first time in 4 years. She witnessed two workers having a screaming match at a shoe store, with one walking out with a loud "I quit!" This worker will easily find employment immediately, if they choose.

The non-profit I'm on the board for cannot hire people. They just are not out there for the kind of pay offered. Pay is rising ahead of what we can afford. We may go out of business.

If we financially can't make it due to the rise in pay, we'll just be one of many failed businesses that will help bring balance to the labor market by taking jobs off the market. There will be no deflation until the labor market returns to sanity.

 

[Montecfo]

The article makes sense. Not sure we will have deflation, but as I have said many times this cycle, the Fed has gone too far too fast without allowing time for policy changes to trickle through the economy.

Hopefully they will now pause and begin cutting as those effects become clear.

Of course, the stimulus spending has not fully stopped. Hopefully some caps on spending will help as well.

 

[jim584672]

We can hope for deflation, not too hopeful that will actually happen. My personal spend rate has actually been flat due to finding new ways to economize. Some things I just don't buy anymore. At least 5% on money is better than 0%.

 

[Montecfo]

Deflation would be a disaster. It is nothing to wish for. It destroys economies, leads to high unemployment and bankruptcy.

If "lower prices" sounds good to you, you are missing the whole picture.

 

[Montecfo]

I don't really buy the deflation predictions, but even if we did have a little deflation, it would never make up for the massive inflation we've had over the last 3 years which is still wayyyy over the target inflation rate, so I'm certainly not worried about deflation and doubt will see any meaningful and real deflation to speak of.

The last decade has been pretty average as far as inflation. So perhaps the "massive inflation" is simply balancing the mild inflation that preceded it.

Having said that, massive stimulus that created this latest bout was not necessary.

 

[JoeWras]

I do not want deflation. I would like to see 2%.

Maybe I should join the Fed.

 

[Koolau]

Deflation would be a disaster. It is nothing to wish for. It destroys economies, leads to high unemployment and bankruptcy.

If "lower prices" sounds good to you, you are missing the whole picture.

Yeah, my mom and dad went through the depression. Their entire world was colored by it. They each had their own little vestiges of fear left over. My dad for instance always kept lots of canned goods on hand as well as hiding silver (US coins.)

Real deflation is a disaster, but much more than 2% inflation can wreck a savings plan if it isn't maintained and tweaked and balanced. My mom and dad didn't understand how to invest and were afraid to. They thought they had enough money in the bank. But they literally came out even at the end. I guess that's okay (as they didn't even know it - I was in charge of their finances at the end.) But it was tense for me.

Yeah, give me a little inflation over deflation. Sad to say, our money system is in other's hands - not our own. Because of that, we have to "trust" that "they" know what they are doing. It's not easy to trust.

 

[cyber888]

I'm experiencing personal deflation in the last few months.
We recently saved almost $1,000 buying a Washing machine and Dishwasher.
And saved around $5,000 for a 3 week vacation.
I hope to save more from discounts.

 

[harley]

I'm experiencing personal deflation in the last few months.
We recently saved almost $1,000 buying a Washing machine and Dishwasher.
And saved around $5,000 for a 3 week vacation.
I hope to save more from discounts.

That's not necessarily deflation. I just bought 4 12-packs of Diet Sprite with a buy 2 get 2 free deal. But since Harris Teeter has decided that a 12-pack costs $9.99, it worked out to $5/pack. That's a discount, but not either deflation or a deal.

I've always been both annoyed and aware when prices are hiked to make a deal look better.

 

[GenXguy]

The last decade has been pretty average as far as inflation. So perhaps the "massive inflation" is simply balancing the mild inflation that preceded it.

Having said that, massive stimulus that created this latest bout was not necessary.

I plugged the last 10 year period through April 2023 into the inflation calculator, and it shows inflation was 30% over the time span. That is most certainly NOT low inflation. And that's even based on the government figures, which obviously are setup to give lower figures than reality, which means inflation is actually even worse than that figure, which explains why my bills go up yearly more than the government inflation figures.

 

[GenXguy]

I've always been both annoyed and aware when prices are hiked to make a deal look better.

Another one that gets me is when the sign says "new lower price" when the price has gone up.

 

[Gumby]

I plugged the last 10 year period through April 2023 into the inflation calculator, and it shows inflation was 30% over the time span. That is most certainly NOT low inflation. And that's even based on the government figures, which obviously are setup to give lower figures than reality, which means inflation is actually even worse than that figure, which explains why my bills go up yearly more than the government inflation figures.

I'm especially concerned about the astronomical rise in the prices of drum heads and drum sticks. I may have to cut back on beating my drum.