Latest Inflation Numbers and Discussion

[MichaelB]

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.

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.

Montecfo’s point was valid. Continuously trying to sensationalize the numbers makes it difficult to have an informed discussion. Likewise, continually making comparisons with prepandemic prices is pointless when the data points under discussion are month to month and year to year measurements.

 

[JoeWras]

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.

Tires are heavily dependent on oil prices.

Montecfo’s point was valid. Continuously trying to sensationalize the numbers makes it difficult to have an informed discussion. Likewise, continually making comparisons with prepandemic prices is pointless when the data points under discussion are month to month and year to year measurements.

Yes. For examples (like the tires), we have a thread for that: https://www.early-retirement.org/fo...nflation-add-yours-114205-70.html#post2970188

This current thread is more for reports, theory and discussion on inflation. I'm not an inflation 'dove' like Montecfo, probably more a 'hawk,' but Montecfo has a point.

 

[JoeWras]

I know people don't like opening links. Here's the summary table of today's report. The last two columns are instructive.

 

[GenXguy]

I know people don't like opening links. Here's the summary table of today's report. The last two columns are instructive.

So stripping food/energy, Core CPI 4.7%, but that includes a drop in used car prices.

The Fed definitely has a lot more work to do to get core inflation down to 2%, although they use the Core PCE for their target.

Interesting that with gas prices running $4/gal, that's down from a year ago.

 

[cyber888]

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.

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.

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.

Your numbers do not add up at all. It's completely wrong wrong wrong. I do my shopping and your prices are nowhere near what I see. Gas prices are way way higher before the pandemic.

And Yes, as I said, you NEVER considered that this is Summer and prices normally go up 20%-30% due to travel. Trying to compare apples and oranges is a big problem.

 

[Chuckanut]

In 2021 and 2022 real wages adjust for inflation were down about 3%. So far in 2023 real wages are starting to catch up with inflation but there is a good distance to go.

We have a Federal government that is spending about an extra TRILLION DOLLARS in the first 10 months of the current fiscal year as compared to the same 10 months in the previous fiscal year. Blaming the working people for inflation when this is going on seems very unfair to me. They still haven’t caught up in real terms to where they were in the beginning of 2021. That’s my understanding.

https://www.vox.com/money/2023/8/10/23824742/real-wages-economy-inflation-no-money

 

[JoeWras]

So stripping food/energy, Core CPI 4.7%, but that includes a drop in used car prices.

The Fed definitely has a lot more work to do to get core inflation down to 2%, although they use the Core PCE for their target.

Interesting that with gas prices running $4/gal, that's down from a year ago.

Yes, core is still a little too warm. Keep in mind, however, that core includes "shelter" which is still absorbing the incredible rise in housing from 2020 through mid 2022. And around here, 2023 is still seeing housing increase, although nothing like the previous two years. So I'm not sure how fast it is going to come down.

As for gas, it is hard to remember, but the numbers don't lie. Last year, July gas prices nationally were around $4.40. July 2023, it is $3.50 or so.

One thing about the energy rise of early last year is that it created a "base" for year over year negative numbers that disappear in a few months since energy crashed last half of 2022.

 

[GenXguy]

Your numbers do not add up at all. It's completely wrong wrong wrong. I do my shopping and your prices are nowhere near what I see. Gas prices are way way higher before the pandemic.

Well not continuing this in this thread about specific items, but I do all my own grocery shopping, and you happened to mention items which I buy regularly. So what I stated is absolute fact at my local grocery store chains. I'm paying $4/gal for regular gas now. On Feb 3, 2020, before the lockdowns, the national average for regular gas was $2.455. But that is all I have to say.

 

[MichaelB]

In 2021 and 2022 real wages adjust for inflation were down about 3%. So far in 2023 real wages are starting to catch up with inflation but there is a good distance to go.

Real wages are distorted by a jump in wages early in the pandemic. It has since smoothed and real wages are above 12/19 levels. These are “average real wages” so distribution is key, so some workers may be falling behind.

The employment cost index, which tracks the total cost of employment and is a key Fed measurement, shows similar behavior.
..
..

 

[madatrub]

Real wages are distorted by a jump in wages early in the pandemic. It has since smoothed and real wages are above 12/19 levels.
..
..

Because all the hourly wage earners got fired/laid off while white collar worked from home.

 

[MichaelB]

Because all the hourly wage earners got fired/laid off while white collar worked from home.

Probably. This is why the jump in wages throws off historical comparisons and should be ignored.

The greater point is, based on BLS data, real wages, which are after inflation, have risen and continue to rise. In fact, if anything, the ECI is still above the level needed to get to the Fed target rate and implies inflationary pressures are still strong.

 

[Gumby]

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.

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.

And what do you plan to do about it? Complaining doesn't seem to have improved matters.

 

[GenXguy]

And what do you plan to do about it? Complaining doesn't seem to have improved matters.

I was really just stating facts, not that they will improve matters. But I'm just personally trying to cut back and save where I can, which does help. And as for that job, I was basically forced into retirement about a year early. It's a complicated story, and I'm dealing with some tough issues that I don't want to get into.

 

[ShokWaveRider]

While inflation is up, I do not think it is as bad as some folks imply. There will always be those that whine about issues, and who is responsible, inflation just being the current "histoire du jour". Yes, energy costs are up, and yes they go up every year regardless. Honestly "our" food prices have been fairly consistent for the last 3 - 5 years, and to us that is a measurement we rely for establishing our overall costs, we have to buy food. And we seem to forget than prices increase all the time, usually on an annual basis, inflation or not. Some also forget SS recipients got an 8% raise last year. And yest mortgage rates are up ..... for now. And yes, home prices seem high, but we also forget that house prices go up on average 4% a year, even and even drop, just not every year, they can be flat for a long time and then jump 30 - 40% in short order. It all works itself out in the wash.

For us it all just seems relatively normal with a few exceptions. Eating out for the most part is a luxury, restauranteurs can charge what they like, and do. Just like a recommendation of 30% tips, we are not forced to pay them.

 

[Montecfo]

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.

If this was the only thread where you have made or are making this point, using the same or similar terms, it would seem more fair.

But you have done so in several bond and fixed income threads also and perhaps elsewhere. And effort has been made to help you with perspective but these efforts have not borne fruit.

 

[GenXguy]

If this was the only thread where you have made or are making this point, using the same or similar terms, it would seem more fair.

But you have done so in several bond and fixed income threads also and perhaps elsewhere. And effort has been made to help you with perspective but these efforts have not borne fruit.

I thought we were done with this discussion. I hope that's not an implied insult, but I do not need your "help" with my perspective. We have different viewpoints, but I'm well aware of the facts. This is a topic I've kept up on, and you don't need to change my perspective to match yours. Not everyone is going to share your opinion. Do not take that personally. It's friendly discussion.

Again, I don't think I have mentioned "skyrocketing" much in the last few weeks - I think just once, except in response to your complaints about it. I'll try to keep these trigger words in mind that may cause some sensitivity. I don't want to upset anyone. Anyway, enough of that discussion. Let's leave other threads out of it and stay on topic.

 

[Montecfo]

I thought we were done with this discussion. I hope that's not an implied insult, but I do not need your "help" with my perspective. We have different viewpoints, but I'm well aware of the facts. This is a topic I've kept up on, and you don't need to change my perspective to match yours. Not everyone is going to share your opinion. Do not take that personally. It's friendly discussion.

Again, I don't think I have mentioned "skyrocketing" much in the last few weeks - I think just once, except in response to your complaints about it. I'll try to keep these trigger words in mind that may cause some sensitivity. I don't want to upset anyone. Anyway, enough of that discussion. Let's leave other threads out of it and stay on topic.

You seem to read in much that is not there.

I think we will be done with the discussion when you stop as kindly requested.

 

[Aerides]

How about you are both done, or take it to PM? Gotta-have-the-last-word stuff is annoying everyone else in the thread.

 

[Koolau]

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.

I'll have to take your (and BLS) word for it but no news outlet I've seen agrees with that assessment. (But, I know we're not supposed to bash news media - so I won't.)

 

[Montecfo]

Producer prices rose 0.3% for the month and just 0.8% yoy.

The so called core PPI was up 2.7% yoy.

The monthly PPI read of 0.3% was higher than the 0.2% expected.


https://www.cnbc.com/id/107285118?&view=story?__source=androidappshare

 

[CaptTom]

Prices have gone down. Eggs are much cheaper, 30% cheaper. Bacon is 20% cheaper, My Coffee Cream is 20% cheaper, etc.

Yeah, I have to call BS on this, too. Of course you could cherry-pick the "on sale" price today and compare it to, say, the Avian Flu spike in egg prices. But we all know that it would be flat out dishonest to use that to bolster a claim that prices are "down."

Anyone who looks at prices knows that there's been a historically significant, broadly-based increase over a relatively short time, and that the "official" government numbers don't match the reality we're all experiencing.

 

[ShokWaveRider]

Yeah, I have to call BS on this, too. Of course you could cherry-pick the "on sale" price today and compare it to, say, the Avian Flu spike in egg prices. But we all know that it would be flat out dishonest to use that to bolster a claim that prices are "down."

Anyone who looks at prices knows that there's been a historically significant, broadly-based increase over a relatively short time, and that the "official" government numbers don't match the reality we're all experiencing.

I have to disagree here, not cherry picking, our food costs have gone down progressively over the last 4 months. We are spending about 30% less than we were previously at the peak and back to our monthly norms now which really have not changed significantly for the last 3 or so years. Except for a short peak that is now over.

 

[NW-Bound]

I never paid that much attention to grocery prices. Food cost is not a big percentage of our total expenses plus my wife is more cognizant of this matter, although I drive her to run food errands twice a week.

Out of curiosity, I looked up the total grocery bills in the last 12 months, 8/11/2022-8/11/2023, and compared that to the total in the period 1/1/2019-1/1/2020.

To my surprise, the increase was 1.68X. Whoa, a 68% increase. I did not eat more expensive food, nor in higher quantities.

Now, what's the economists at the BLS say about price increases in that period?

I looked up the CPI, and counting from the middle of the above periods, meaning from 6/2019 to 2/2023, the CPI went up 1.17x. My food costs went up a lot more. What's going on?

 

[Koolau]

I never paid that much attention to grocery prices. Food cost is not a big percentage of our total expenses plus my wife is more cognizant of this matter, although I drive her to run food errands twice a week.

Out of curiosity, I looked up the total grocery bills in the last 12 months, 8/11/2022-8/11/2023, and compared that to the total in the period 1/1/2019-1/1/2020.

To my surprise, the increase was 1.68X. Whoa, a 68% increase. I did not eat more expensive food, nor in higher quantities.

Now, what's the economists at the BLS say about price increases in that period?

I looked up the CPI, and counting from the middle of the above periods, meaning from 6/2019 to 2/2023, the CPI went up 1.17x. My food costs went up a lot more. What's going on?

You have to forget your numbers and accept the gummint numbers. The gummint numbers are correct and you are wrong.

 

[NW-Bound]

You have to forget your numbers and accept the gummint numbers. The gummint numbers are correct and you are wrong.

But I don't know the number for just food. The CPI of 1.17x is for everything.

And then, maybe my wife has been buying filet mignon to cut up for the vegetable stir fry and does not tell me.