Latest Inflation Numbers and Discussion

[MichaelB]

I just hope the Fed doesn't get weak in the knees if they need to hold or bump rates again to finish the job on inflation. Now that they've set the expectation of flat or down, it will be harder to reverse course if necessary.

I think the Fed reducing rates is a high probability event this year. As the inflation rate falls the real rate of interest increases, and this jeopardizes the Fed’s other mandate, full employment. The latest economic data shows early signs of weakening in the labor market.

The Fed may also begin to slow its QT effort.

 

[GenXguy]

Two of my kids are looking to rent right now. They say rents have and are continuing to come down here.

I was looking within Illinois. Even the news articles are talking about rent being higher here, which goes along with what I'm seeing from my personal searching. Several years back, I thought they were high, but this is ridiculous.

 

[ShokWaveRider]

I think the Fed reducing rates is a high probability event this year. As the inflation rate falls the real rate of interest increases, and this jeopardizes the Fed’s other mandate, full employment. The latest economic data shows early signs of weakening in the labor market.

The Fed may also begin to slow its QT effort.

I just hope they do not do it till after May 2024 when our IRA 5y CDs mature.

 

[GenXguy]

I just hope they do not do it till after May 2024 when our IRA 5y CDs mature.

Unfortunately, it's already in the cards that they are forecasting rate cuts, so those 5 years CD renewals won't be as good. Hopefully, they will hold off on those rate cuts to get "year over year" inflation under control against inflationary pressures we are seeing now.

 

[Chuckanut]

Just received my Jan 24 gas heating bill. When compared to my Jan 23 bill gas per therm has dropped 21.8%.

Since installing a mini-split heat pump, my Winter electric bill for the colder months of Nov to Dec showed I used 700 KW less than the average for the same time frame over the past three years. Since I am on a level pay plan, and they only recalculate the payment a few times a year, I have not seen a drop in my monthly bill yet.

N

 

[Ian S]

I've yet to see a utility bill drop that wasn't base on usage drop.

Well, the comment you quoted stated that the drop (over 20%) was a drop in cost per therm which would be independent of usage I would assume.

 

[GenXguy]

Well, the comment you quoted stated that the drop (over 20%) was a drop in cost per therm which would be independent of usage I would assume.

Yeah, and my point is that I have NOT seen that. The only drop I ever saw has been if the usage was down, which isn't really a price decrease. But, the bill still ends up going up for me at some point because the facility charge keeps going up despite keeping usage down or small unit price changes. It's about $70 for electrical, and another charge for natural gas, just to have access.

 

[DJRR]

Yeah, and my point is that I have NOT seen that. The only drop I ever saw has been if the usage was down, which isn't really a price decrease. But, the bill still ends up going up for me at some point because the facility charge keeps going up despite keeping usage down or small unit price changes. It's about $70 for electrical, and another charge for natural gas, just to have access.

LOl, you live in some strange vortex where prices never go down. Time to look at other locations

For us, our December gas bill - heating, water, and stove was at .43/therm. A year ago it was .8317/therm so 48% decrease. My distribution charge was unchanged at .5728/therm. So great but with a bill of $36.25 it only saved me $10. Maybe you signed a contract?

Gas was $2.91 at the high priced station near my gym this morning. 20 boneless wings plus large fries for the game was $16.99 and tomorrows salmon was $10.99/lb, so down $1.

Things have moderated here, my salary is up 38% in 3 years, and I earned $3,300 in interest this year vs. $330 2 years ago. All good here.

 

[GenXguy]

LOl, you live in some strange vortex where prices never go down. Time to look at other locations .

Not only do they not go down, they keep going up! (Talking about my utility bills year to year average). Gasoline is down closer to $3 now, but that's still way up from prepandemic Jan 2020, and that's not a utility bill. lol

You must have missed my other post about how I said I couldn't afford to relocate now because inflation. Home prices are way up from what they were just a few years ago when I was looking into it. I also don't believe I would save money moving anywhere I would want to live as this is supposedly a lower cost of living area except for taxes.

I don't know of any food items that have dropped in price because I don't count sale prices like most people seem to. Even though eggs had dropped in price, that was a special case due to Avian flu, and egg prices have actually gone back up some. Pop recently made a big jump - not seeing any drops, though.

Also, you should understand that inflation moderating does NOT mean prices are decreasing. It means they aren't increasing as quickly as they were. So, not many things have decreased, most are still increasing. I would love to see the price drop on some things.

They were interviewing a restaurant owner on TV who had to keep raising his prices because everything is going up in price including minimum wage. And the interviewer asked if he has been seeing prices of some food items start to come down in price. And the restaurant owner said no, everything is going up.

Edit: Took a look at my electrical bill. That facilities charge is $68. It's lower on my gas bill, but it's year round, even in the summer when I don't use any.

 

[DJRR]

Also, you should understand that inflation moderating does NOT mean prices are decreasing. It means they aren't increasing as quickly as they were. So, not many things have decreased, most are still increasing.

Sure, but incomes go up too. Inflation adjusted wages are up each of the last 6 months, so purchasing power has increased each month. I used to be able to buy a car for $2,500 but I don't see many bitching that they can't buy 4 cars per month. Everyone complains about price increases, but income increases are a result of their own effort, not inflation LOL. The only people really hurt are those who can't increase their income faster than inflation and those who can't lock in a personal rate of inflation that is less than we are experiencing. We saw that in the personal inflation thread. I have a cheap fixed mortgage and only use 400 gallons of gas a year, so I care minimally about real estate or gas prices.

As a general observation I would say that food and energy are the lowest % of my income in my lifetime. Maybe a fraction more than 5 years ago, but no where near the 20-30% of their income my parents paid in the 70's. The only thing that has really inflated is home prices. They have been consistently 2.5 - 3.5 times annual salary during my lifetime but are now ~ 5x. That makes it really rough on the 1/3rd of people who don't have homes and want one.

 

[GenXguy]

Sure, but incomes go up too. Inflation adjusted wages are up each of the last 6 months, so purchasing power has increased each month.

Wages are still not up as much as inflation in recent years, plus higher wages contribute to higher inflation, which isn't good for us retired people who no longer even have wages, and the S&P 500 still hasn't recovered from 2 years ago, so investments stalled out quite a bit. Plus, CDs were paying very low earlier in this inflation cycle, and the higher rates we got early this year means more goes to taxes cutting into the real gain. It doesn't help me at all that wages are up - it just makes the problem worse. And what's worse, is that the real inflation I'm seeing is more than the government figures on my largest bills like homeowner's insurance, car insurance, and property tax. It is what it is, so I'm just pointing out the damage that was done. So, I probably won't relocate and am cutting discretionary spending significantly vs. what I had expected a couple years ago that I would be able to spend when I retired (which was earlier this year). Going back to work isn't an option anymore. I'm no longer a working man, as Geddy used to sing.

 

[11522914]

Yeah, and my point is that I have NOT seen that. The only drop I ever saw has been if the usage was down, which isn't really a price decrease. But, the bill still ends up going up for me at some point because the facility charge keeps going up despite keeping usage down or small unit price changes. It's about $70 for electrical, and another charge for natural gas, just to have access.

Your facilities charges are quite high. I just checked mine and for gas it is $10 per month and electricity is $14. $70 per month is insane.

 

[Closet_Gamer]

I think the Fed reducing rates is a high probability event this year. As the inflation rate falls the real rate of interest increases, and this jeopardizes the Fed’s other mandate, full employment. The latest economic data shows early signs of weakening in the labor market.

The Fed may also begin to slow its QT effort.

Agree its likely.

I'm just an inflation superhawk. I'd rather not spend the next generation inflating away the debt and dealing with the side effects of the cash creation machine that led to the Fed's balance sheet.

I'd much rather see moderate to high rates and a sustained QT plan even if that drags nominal gowth. I think cleaning up the zombies, getting a lasso on real estate prices and creating material cost for government overspending will lead to better societal outcomes.

Those are hopes/opinions ... I agree with your forecast that rates will head down. I do think the market has over-baked that though. They will go down more slowly that the market seems to think.

 

[Closet_Gamer]

The only thing that has really inflated is home prices. They have been consistently 2.5 - 3.5 times annual salary during my lifetime but are now ~ 5x. That makes it really rough on the 1/3rd of people who don't have homes and want one.

I'm not sure I agree that inflation has been matched by wages in a broad sense. I know the math being published, but it doesn't feel right to me. I haven't had a raise in a while and we're blessed that the recent inflation hasn't forced any material change in our lifestyle. I only know what I see/feel when I shop.

I stopped to grab some Coke Zero for a family function over the holidays. I paid $8.99 for an 8 pack of coke 12 oz bottles. If I had the loyalty card for that store it would have been $7.99.

Took DW and DD to Texas Roadhouse for dinner last night. $96 after tip with no apps and only two of us having one beer. I like Texas Roadhouse, but $22 for a 12 oz Ribeye, a few brocolli florets and some salad?

I can't imagine wages have broadly kept up with that.

I 100% agree, however, that the real damage is in real estate. My kids will face a very different world than I did when it comes to getting a house.

 

[Gumby]

I've yet to see a utility bill drop that wasn't base on usage drop. In fact, my electrical bill went up anyway. I don't have in front of me, but one reason is that they raised the facility charge to about $70, so that's charged before I use my first kWh of electricity. The gas bill went up also a while back for that reason. Water bill is up recently also, and they announced they are going up more. Very difficult to stay ahead. Of course, we can say that the prices of everything going up isn't inflation and make up reasons why these particular things have gone up in price, but it is part of the inflation picture.

I just looked on the Illinois Commerce Commission website to find the history of natural gas prices in Illinois. Depending on your particular gas supplier, they dropped between 38% and 51% over the past year on a per therm basis. Source https://www.icc.illinois.gov/natural-gas-choice/purchased-gas-adjustment-rates

I also looked on the Illinois Power Agency site for the latest basic monthly deliver charge for residential customers. If you got your service through Commonwealth Edison, it is $11.90 per month. If you had electric heat, it would be $13.94 per month. Source https://azure-na-assets.contentstac...ebee5fe6ed02f8/Ratebook.pdf?branch=prod_alias Page 783. Ameren is cheaper. https://www.ameren.com/-/media/rates/files/illinois/2023/aiifmapp123.ashx as is MidAmerican https://www.midamericanenergy.com/media/pdf/rates-for-electric-delivery-and-service.pdf Page 400.

 

[GenXguy]

I just looked on the Illinois Commerce Commission website to find the history of natural gas prices in Illinois. Depending on your particular gas supplier, they dropped between 38% and 51% over the past year on a per therm basis. Source https://www.icc.illinois.gov/natural-gas-choice/purchased-gas-adjustment-rates

I also looked on the Illinois Power Agency site for the latest basic monthly deliver charge for residential customers. If you got your service through Commonwealth Edison, it is $11.90 per month. If you had electric heat, it would be $13.94 per month. Source https://azure-na-assets.contentstac...ebee5fe6ed02f8/Ratebook.pdf?branch=prod_alias Page 783. Ameren is cheaper. https://www.ameren.com/-/media/rates/files/illinois/2023/aiifmapp123.ashx as is MidAmerican https://www.midamericanenergy.com/media/pdf/rates-for-electric-delivery-and-service.pdf Page 400.

Thanks for your efforts. I only have Ameren for gas and don't have Commonwealth Edision or MidAmerican. We have an electric coop for electrical that serves this part of the community, and the facility charge has skyrocketed to $68/mo before I use my first kWh. The Ameren gas bill one has a different name and has jumped over time but isn't as high - about $20 now, even in the summer when not using any.

With hiking the facility fee, it brings up the total cost, even if the unit price is stated to be a little lower, although I didn't actually see the unit rate on the electric bill.

 

[GenXguy]

Your facilities charges are quite high. I just checked mine and for gas it is $10 per month and electricity is $14. $70 per month is insane.

For certain. It's an electric cooperative. It's actually $68, for now, but agreed, it's quite high, indeed. My gas one is double yours also.

 

[GenXguy]

I'm not sure I agree that inflation has been matched by wages in a broad sense. I know the math being published, but it doesn't feel right to me. I haven't had a raise in a while and we're blessed that the recent inflation hasn't forced any material change in our lifestyle. I only know what I see/feel when I shop.

I stopped to grab some Coke Zero for a family function over the holidays. I paid $8.99 for an 8 pack of coke 12 oz bottles. If I had the loyalty card for that store it would have been $7.99.

Took DW and DD to Texas Roadhouse for dinner last night. $96 after tip with no apps and only two of us having one beer. I like Texas Roadhouse, but $22 for a 12 oz Ribeye, a few brocolli florets and some salad?

I can't imagine wages have broadly kept up with that.

I 100% agree, however, that the real damage is in real estate. My kids will face a very different world than I did when it comes to getting a house.

He did mention only the last 6 months, so that's cherry picking a time AFTER the worst of the inflation in the years leading up to it. Of course, either way, those higher wages aren't helping those of us relying on investments which haven't done much over the last two years (e.g. S&P 500 still 2 years since previous record high).

But on the matter of wages, where I had worked until mid 2023, raises had only been like 3% or 4% when inflation was running much higher (and real world inflation quite a bit more), plus they were warning us of even lower raises closer to 2% for this year and much higher health care insurance related costs for 2024 (which did go up over 40% for those still there). Inflation has been costly to the organization, so they can't afford to pay as well. I don't think their wages are going to keep up unless you happen to be near the low end of the wage earners, due to minimum wage jumping over 7% in this state.

 

[Raygun99]

Car insurance is up 17% 2 Cars are $1218 every 6 mos.($203 per MO). Home Insurance up 14% $550K $$265 per mo $3180 -- Combined. That's where I got true inflation. 1% deductible $2000 on a Hail Storm. Live in TEXAS .

 

[GenXguy]

Car insurance is up 17% 2 Cars are $1218 every 6 mos.($203 per MO). Home Insurance up 14% $550K $$265 per mo $3180 -- Combined. That's where I got true inflation. 1% deductible $2000 on a Hail Storm. Live in TEXAS .

Mine was up 22% with no tickets, claims, or policy changes. There was some discussion of that here:

https://www.early-retirement.org/fo...nflation-add-yours-114205-94.html#post3026457

Homeowner's insurance has really been jumping in recent years also, with no claims or policy changes. I think it was around 12% each of the last 3 years. And property tax is up. All my biggest bills go up the most, with some still to come due to home maintenance / remodel, which I've heard is way up since pre-pandemic.

 

[Parfumeur]

But don’t take my word for it
See here:

https://awealthofcommonsense.com/2023/11/we-dont-understand-how-inflation-works/[/QUOTE]

Sorry, but can't find any substantial BIO, CV or qualifications for the author.

 

[RPHDOC1]

One of the reasons I use Fidelity for cash management. I use a brokerage account and it sweeps to a MM fund yielding ~5%. No need to deal with banks.

yep good strategy also look at raisen for a better. deal

 

[ERhoosier]

Too many focus 100% on CPI when what matters is their PERSONAL rate of inflation...price changes of goods/services they have to pay for. For example base shelter (rent or "owner's equivalent rent") is almost 1/3rd of total CPI, but for someone who owns their home outright that inflation rate is zero. New & used car prices are ~10% of CPI, but irrelevant to one not buying a car. OTOH- We all need to eat (food inflation 14% of CPI), and medical care (7-8% of CPI) can be a huge issue to someone with serious illness and health insurance with rising premiums/co-pays/deductibles/OOPmax.

So what really matters is not CPI-U, but CPI- YOU

 

[GenXguy]

Too many focus 100% on CPI when what matters is their PERSONAL rate of inflation...price changes of goods/services they have to pay for.

Yeah, and that's what's been much higher than CPI for so many people including myself.

For example base shelter (rent or "owner's equivalent rent") is almost 1/3rd of total CPI, but for someone who owns their home outright that inflation rate is zero.

Until you have to pay your property tax, homeowner's insurance, and do any type of maintenance (roof, hvac, etc) any time in the future, which can be 100% higher or more today than 3 years ago. Owning a home has gotten very expensive for me and is the biggest reason why personal inflation is so high.

New & used car prices are ~10% of CPI, but irrelevant to one not buying a car.

Yeah, if you never have to buy a car in the future, because moderating inflation still means prices rise, just not as fast. And you may be buying a new car eventually. Also maintenance costs are way up on cars, so you're still paying more in the meantime.

You can add your personal examples of inflation here:
https://www.early-retirement.org/forums/f27/examples-of-current-inflation-add-yours-114205-94.html

 

[audreyh1]

CPI release this week on Thurs Jan 11.