Latest Inflation Numbers and Discussion

[luckydude]

It is easy to see. CPI flat in July, up .1 percent in August. It is a huge improvement from prior months.

It's only "improvement" in the sense that the deep inflation hole we're in isn't getting any deeper. But a dollar has lost around 30% (?) of its purchasing power in the last year and a half due to inflation. That loss of purchasing power is PERMANENT and will never be "improved".

It's kind of laughable to see folks in certain circle declare victory on inflation---"See, the price has stopped increasing! We've beat inflation! We've won!" Well, tell that to the average folks whose dollar is now worth only 70 cents compared to before and are now struggling to afford daily necessities and utilities. Ask them if they feel that their situation has 'improved'.

 

[shotgunner]

Makes me wonder what folks are doing with lower fixed incomes... 400 or 500 or 600+ hundred dollar a month electric bills and double/triple gasoline bills... Not to mention all the other price increases. Yikes, this has to be getting really serious for them.

I guess you just cut back on everything possible and/or charge it.

Starting on August 1st NH's largest electric company, Eversource, increased the cost of electricity by 111%. When combined with the various transmission charges per kwh the overall cost for electricity jumped over 50% and the overall rate is now .32+ per kwh. A good friend of mine, who has a large home and three kids, A/C, swimming pool and multiple chest freezers as he raises his own meats, his electric bill was a whopping $754 dollars for August. I would have to think the new electric rate will push grocery prices up even more since a grocery store is a giant refrigerator and freezer.

 

[Montecfo]

I consider that noise in relation to big-picture inflation. Big drops in fuel one month makes it look like inflation has gone down. But next month food goes up and it makes inflation look like it's heading up again. But year over year CPI differences are in the 8% to 9% range.

Yes.and those increases and drops net to a total of .1 percent over the past two months. Annualize that and you get an annual rate under 1 percent.

You can call that "noise" if you wish
.I call it massive improvement. Does that mean inflation is beaten? Of course not. This will be a slog but we have two months of very modest inflation in the aggregate.
And there was no way for the annual number to go down very much based on a single month. It is just math.

But the path to lower annual inflation numbers is paved with improving monthly numbers and we have those.

Still curious how the market reacts so strongly to a cake that was baked months ago.

 

[Montecfo]

It's only "improvement" in the sense that the deep inflation hole we're in isn't getting any deeper. But a dollar has lost around 30% (?) of its purchasing power in the last year and a half due to inflation. That loss of purchasing power is PERMANENT and will never be "improved".

It's kind of laughable to see folks in certain circle declare victory on inflation---"See, the price has stopped increasing! We've beat inflation! We've won!" Well, tell that to the average folks whose dollar is now worth only 70 cents compared to before and are now struggling to afford daily necessities and utilities. Ask them if they feel that their situation has 'improved'.

Well the monthly inflation numbers have improved. That is just a fact and it *is* the point. Not sure who you are quoting.

The rest of your comments are in effect a grievance. What is the 30 percent loss of purchasing power to which you refer?

 

[audreyh1]

It's only "improvement" in the sense that the deep inflation hole we're in isn't getting any deeper. But a dollar has lost around 30% (?) of its purchasing power in the last year and a half due to inflation. That loss of purchasing power is PERMANENT and will never be "improved".

It's kind of laughable to see folks in certain circle declare victory on inflation---"See, the price has stopped increasing! We've beat inflation! We've won!" Well, tell that to the average folks whose dollar is now worth only 70 cents compared to before and are now struggling to afford daily necessities and utilities. Ask them if they feel that their situation has 'improved'.

Over the past 18 months, since February 2021 thru August 2022, cumulative inflation is 12.61%, so purchasing power loss was 12.61%, not 30%.
https://inflationdata.com/inflation/inflation_calculators/Cumulative_Inflation_Calculator.aspx

 

[ShokWaveRider]

I think inflation is now baked in for a while. It's gonna require a lot of pain to get it under control. YMMV

Not so much for most of us here taking part in ER.ORG though as we have buffers.

 

[street]

It's still a long way from "transient!"

X2

 

[aja8888]

Starting on August 1st NH's largest electric company, Eversource, increased the cost of electricity by 111%. When combined with the various transmission charges per kwh the overall cost for electricity jumped over 50% and the overall rate is now .32+ per kwh. A good friend of mine, who has a large home and three kids, A/C, swimming pool and multiple chest freezers as he raises his own meats, his electric bill was a whopping $754 dollars for August. I would have to think the new electric rate will push grocery prices up even more since a grocery store is a giant refrigerator and freezer.

Wow!

For those who wish to see the CATAGORIES where inflation has been heading, just read this short article posted earlier by me (it's services, baby):

Services Inflation Spikes, Core CPI Jumps, Food Inflation Worst since 1979, Durable Goods Rise, but Gasoline & Airfares Plunge

https://wolfstreet.com/2022/09/13/s...-but-gasoline-airfares-plunge/#comment-465222

 

[Koolau]

Starting on August 1st NH's largest electric company, Eversource, increased the cost of electricity by 111%. When combined with the various transmission charges per kwh the overall cost for electricity jumped over 50% and the overall rate is now .32+ per kwh. A good friend of mine, who has a large home and three kids, A/C, swimming pool and multiple chest freezers as he raises his own meats, his electric bill was a whopping $754 dollars for August. I would have to think the new electric rate will push grocery prices up even more since a grocery store is a giant refrigerator and freezer.

This would seem to be devastating. Are there any explanations as to why the rates are so high compared to other mainland states? We are used to rates like this in the Islands, but I find it shocking even for the NE.

 

[shotgunner]

This would seem to be devastating. Are there any explanations as to why the rates are so high compared to other mainland states? We are used to rates like this in the Islands, but I find it shocking even for the NE.

For as long as I can remember NH has had one of the highest electric rates in the lower 48. I believe it started when Seabrook Nuclear Power Plant Unit #2 was aborted after all the components had been paid for and construction of it started. "Stranded costs" are still part of our electrical bills. In addition Eversource, the largest provider owns no power plants, they simply buy power and resell it. Prior to Aug 1, 2022 our supply rate was roughly .105 per kwh. According to Eversource the increase in the cost of natural gas used to produce electricity pushed the residential rate up to .225 per kwh. Again with tranmission costs, stranded cost etc the overall rate is over .32 per kwh. It's hard on residents and business' alike.

 

[luckydude]

Over the past 18 months, since February 2021 thru August 2022, cumulative inflation is 12.61%, so purchasing power loss was 12.61%, not 30%.
https://inflationdata.com/inflation/inflation_calculators/Cumulative_Inflation_Calculator.aspx

Bad math on my part. Thanks for the correction.

 

[Chuckanut]

Here’s one opinion on the future inflation rate:

https://www.wsj.com/articles/markets-keep-making-the-same-mistake-about-inflation-11663163494

Basically the author believes that while inflation will eventually return to more normal levels, it will take much longer that people currently expect.

“Tues*day’s in*fla*tion fig*ures de*stroyed the idea that the Fed would pause soon. Ex*clud*ing volatile food and en*ergy, prices rose 0.6%, which if sus*tained would be an an*nual rate above 7% and higher than any time from 1991 to the pan*demic.”

“Other meth*ods used by the Fed to ex*tract sig*nal from noise were sim*i*larly aw*ful: the me*dian rise, an av*er*age that trims off the big*gest and small*est price changes, and the rise in “sticky” prices that aren’t changed very of*ten.”

 

[aja8888]

Here’s one opinion on the future inflation rate:

https://www.wsj.com/articles/markets-keep-making-the-same-mistake-about-inflation-11663163494

Basically the author believes that while inflation will eventually return to more normal levels, it will take much longer that people currently expect.

Hit the paywall. Not available without a subscription to the WSJ.

 

[Chuckanut]

Hit the paywall. Not available without a subscription to the WSJ.

That’s why I toss in a few quotes.

 

[aja8888]

That’s why I toss in a few quotes.

Looks like you added some. What's with all the asterisks (*)?

 

[ExFlyBoy5]

Wow!

For those who wish to see the CATAGORIES where inflation has been heading, just read this short article posted earlier by me (it's services, baby):



https://wolfstreet.com/2022/09/13/s...-but-gasoline-airfares-plunge/#comment-465222

I keep seeing the word "plunge" in many of these releases. I have seen NOTHING "plunge" except purchasing power of the dollar.

 

[ExFlyBoy5]

That’s why I toss in a few quotes.

Those quotes are hard to read with the random *** sprinkled throughout.

 

[aja8888]

I keep seeing the word "plunge" in many of these releases. I have seen NOTHING "plunge" except purchasing power of the dollar.

Don't forget about the stock market in general and the heady "no revenue, no earnings" disruptor stocks plunging.

 

[Chuckanut]

Those quotes are hard to read with the random *** sprinkled throughout.

That’s the way my phone coped the text. My fumble fingers are too big to risk deleting the * characters.

 

[Koolau]

That’s the way my phone coped the text. My fumble fingers are too big to risk deleting the * characters.

We'll let it go this time.

 

[ExFlyBoy5]

That’s the way my phone coped the text. My fumble fingers are too big to risk deleting the * characters.

No worries!

 

[ExFlyBoy5]

Also, I can't help but think that inflation may get significantly worse if a rail road strike happens. There are already supply chain issues and if/when a strike happens...oof. It seems that several RRs are already making changes in operations by curtailing and/or modifying freight. My crystal ball has never been so cloudy.

https://www.cnn.com/2022/09/13/business/railroad-strike-outlook-economic-impact/index.html

 

[Koolau]

All inflation bets are off if we have a significant gulf hurricane - what a pleasant thought! We're very vulnerable right now on many fronts. Not much slack in the supply chain and folks are champing at the bit for wage increases. Could be the perfect storm. YMMV

 

[aja8888]

All inflation bets are off if we have a significant gulf hurricane - what a pleasant thought! We're very vulnerable right now on many fronts. Not much slack in the supply chain and folks are champing at the bit for wage increases. Could be the perfect storm. YMMV

It's probably a good time to go find the air raid shelters we built in the 1960's and stock them up and get prepared for the worst!

 

[Koolau]

It's probably a good time to go find the air raid shelters we built in the 1960's and stock them up and get prepared for the worst!

I do plan to refill my pantry when we return to the Islands. YMMV