Assuming you don't get a salary raise every year, and if you do, also good for you :-) but the critical factor here is, your purchasing basket of course and the percentage from each item, and of course the rate of inflation on each item.
For example, Energy Cummulative inflation is at 32% just for the last 12 months.
If you did not get a raise in the last 3 years, then with food at 12% every twelve months I am not far from the estimate. Now food is normally not a big percentage of a household costs but for example housing, as in rent for persons who rent and don't have a mortgage.
If a big percentage of your costs are housing and you had to move, or for example will have to move in the next 12 months, you might find housing costs like rent on a reasonable place, increased more than that.
Can you share your source for the energy cumulative inflation number? I'm looking at "urban consumers all items in us cities average" on the st louis fed website and it's giving me 265->290, which is a fair bit short of 32%.
"The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981."
"The statistics office also highlights rising energy and fuel prices, revealing that gas prices increased by 53 percent and electricity prices by 74,9 percent between November 2020 and November 2021."
Oh, I see. You're just citing the slices that have grown by the most, and therefore concluding that a 41% raise is a loss of purchasing power. This is not a valid method to compute purchasing power, nor a reasonable basis for asserting that someone who got a 41% raise in one year lost purchasing power.
Well it depends on how much each of the slices is part of the overall basket.
As you probably seen from one of the references, if rent costs increased 40% in most US cities and that represent a major part of a household costs, the fact food
who is normally a small part of household cost "only" increased 8% is of little consolation.
Of course the comment was made without understanding the individual household scenario of xxpor. But the overall argument that, what would normally be considered a very high salary increase, means for some households nowadays,
a real loss of purchasing power, I would argue, it still stands.
The baseline belief would be that their cost mix is about the average, which is up a little more than ten percent. But you flatly asserted that they had lost purchasing power. This is unlikely. You should not make such sweeping statements without first identifying some rational basis for them.
I think you missed the gist of the comment, so I am not sure I will be able to clarify further, but I will try one last time.
A salary raise of around 40%, is an outlier for most "at will employees". Maybe with the exception of when transferring jobs. For the composition of expenses of most households, energy, transport and housing, are some of the biggest part of most households.
With rent costs increasing in the 40 to 45%, energy in the 30 to 35%, and other costs in similar ranges, AND still increasing, what normally would be a
great salary increase is supposed to be diluted in the current inflation figures. These are STILL a up trending direction ( Can hardly wait for the April figures)
I provided the data to support it, and you seemed focused on the fact I did not ask xxpor to layout his private life, before making the comment? :-)
For most families in the US and Europe salary increases in the 35% to 40%, still mean loss of purchasing power if you take an analysis looking at a the last 3 years and the next 3 years. Assuming that is a one off event every 3 or 4 years.
With the current increases, even that type of salary change would be already diluted.
That is what the highest inflation of the last 40 years means, and that was the gist of the comment.
European reference: "Strongest inflation in almost 40 years"
I have a fixed rate mortgage and an all electric house, including an electric vehicle. That electricity is ~95% from hydropower.
The only real inflation I've seen is in food (which is a trivial part of my budget), electronics, and "house services" like electricians or plumbers, which I 99% DIY anyway.
