The groceries I'm buying now for $4.79 now were $2.49 in 2019. Roughly 90% overall inflation rate for everything I buy since 2019. That being said I decided not to change my habits and preferences - but it's hurting to say the least.
The context of the post you're referring to contextualized "Everything" as related to the subject of groceries. Trying to move the goalposts to "but he said everything" and ignoring the context of his comment is not productive discourse. What are you trying to get at?
> The context of the post you're referring to contextualized "Everything" as related to the subject of groceries.
I did not interpret it that way. I interpreted that as trying to imply a breadth of cost increase that was not true, so I was trying to call that out.
If we interpret it that way, then I might not have replied, this comment does a better job: https://news.ycombinator.com/item?id=38281712 But I might have pointed out that "groceries" is a pretty narrow view on inflation.
I don't understand why this is being downvoted. I'm surprised that people on this site could have lived through covid and still trust anything that comes out of government.
The government has always been incentivized to make inflation numbers lower than they are. There have been numerous changes to CPI methodology, many in just the last few years. Hedonistic adjustments are questionable at best.
Moreover: inflation is a gradient, not a singular vector. You will experience inflation differently depending on where you are in that gradient. Reporting a single number for inflation is about as useful as reporting a single number for the temperature of the planet.
The government saying that inflation is ending is not contradicted by the OP's comments about previous price increases. When there is not or small inflation, prices don't go back down. they just stay at the current price.
If you look at 2018-2019 circulars for your supermarket (you can usually find archives online for big chains) and compare them to today, it's easy to see that prices did increase ~30%, but not 100% like it "feels like" they increased.
30% is a lot! But it is what the CPI numbers imply for food, and it's more accurate than "feels like." or "these few things went up 100% so everything went up 100%."
Feelings are important, but they are not the reality, and they don't imply a government conspiracy.
I still hold that a huge part of the frustration with price changes over the past four years is people hearing news about inflation and thinking it means prices.
Inflation has returned to normal levels, but I don't think most economists expect prices to broadly decrease. Decreasing prices can be a (very) bad thing.
Inflation is quite a misunderstood little number. It is actually a measure of the rate of increase in prices i.e. it's a velocity, not a position.
When inflation is low, prices grow slowly over time. When it is high, they grow quickly over time. High inflation over a sustained period of time leads to a meteoric increase in prices.
For prices to decrease, the inflation rate would have to be negative. For them to decrease to pre-pandemic levels, inflation would have to be negative for a sustained period of time.
>> hearing news about inflation and thinking it means prices
Well the article does start with "Wholesale prices in October posted their biggest decline in 3½ years, providing another indication that the worst of the inflation surge may have passed".
I don't think anyone expects prices to go down, just to stop going up so fast.
The Long Depression (what GP refers to as the Panic of 1873), and which was popularly known as the Great Depression until the later one stole the name, was also deflation-related. Some of the others, too.
When you have deflation, people save more money, or delay spending it, because their dollars will be worth more tomorrow; but this reduction in spending just causes more deflationary pressure ("Undercut our competitors or we won't make any sales!").
This process is self-perpetuating and can get out of hand very quickly.
People know that, that's not the issue. The issue is that wages over 4 years have not kept pace, which means that not only did they go in the hole (debt) during this time, but they're still either adjusting what they purchase or continuing to slide.
Debt has skyrocketed if anyone's had their head under a rock.
> people hearing news about inflation and thinking it means prices
Does it not mean prices? Anyway, prices are up. A lot of people are frustrated. I believed inflation was a measure of that, but if inflation is actually something else, it wouldn't make people any less frustrated.
Inflation is the change in prices. We ideally want a little bit of it to get money moving around the economy. With stimulus checks and low interest rates, there was too much money chasing too little goods, causing prices to rise and YoY inflation went up to 10%. Rising interest rates brought inflation back down to where it should be. But the prices themselves aren't going to go down. That would be deflation, which causes money to stop moving around in the economy.
Money has to move around the economy for it to be a good one. Every single dollar you earn, someone else spent. Every dollar you spend, someone else earns. Deflation gets people to stop spending, which means people stop earning, which means people stop spending (since they have to tighten budgets or don't have money), which means people stop earning, and soon enough the economy goes in the shitter.
We've had extended periods of deflation exactly two times since we've had the means to start tracking it. The first time was called The Great Depression. The second time was called The Great Recession.
> With stimulus checks and low interest rates, there was too much money chasing too little goods, causing prices to rise and YoY inflation went up to 10%.
At least half the run-up in inflation was on the supply-side of things:
Deflation is not bad and is in fact good for savers. Moreover, deflation encourages less consumption which is good for the planet. I see you've been brainwashed into thinking the government needs to steal 2% of your wealth every year lest the economy will blowup.
It doesn't mean prices in the same way that velocity doesn't mean position. We stopped moving North as fast, back near the speed we usually move North. That doesn't put us back where we were - we have to actually go South (deflation) for that, and there are reasons that's likely to be a bad idea even if people are mad about how far North we've recently come.
That is BS mantra by economist that failed as entrepreneurs. 1990 to 2010 American booms largely help by lower production prices from China. Your average laptops and computers from the 90s tend to drop prices bigly from $10K mac to somewhere around $2K. Let me know how bad Apple did. Let le know how worst off Americans during those low gas prices and cheap GPUs.
Also, prices in some instances increased drastically, let's say something went up 15%-25% in price, and now is going to only go up 3%. That 3% gain is MUCH more than it was before the 15%-25% price increase. Like interest, inflation compounds. This is one reason people are still feeling the pinch of inflation even as it has slowed.
It's hard to explain to people as you've said that prices aren't going to decrease in 95% of instances. Prices are sticky and outside of some goods with high volatility, the prices of 2019 are never coming back. That's a tough position politically too, and one reason I feel despite the economy having done pretty well that Biden is underwater on the economy as a whole. Especially coupled with interest rates rising.
There shouldn't be anything academic or contentious about the meaning of "inflation". Prices are what floor of the building you're on, inflation is how fast the elevator is going.
Unfortunately inflation will never be over. Some economist somewhere came up with the idea that people need to be encouraged to spend our invest their money. And you can do that by slowly making the cost of things go up, reducing the buying power of a dollar. Which forces you to spend it or save it, Rather than stick it under your mattress.
But why? I think most people will want to invest their money. And a few will suck it under their mattress, but enough will want to invest it, to keep it circulating.
We really need to stop forcing inflation
The article is reporting that wholesale prices (measured by the PPI) have declined 0.5% Y/Y. It might take a while to affect CPI, but that would strongly suggest that inflation has reached a turning point.
No, it wouldn't, because PPI rate of change isn't a leading indicator of CPI rate of change, and, anyhow, PPI inflation has recently been unusually elevated compared to CPI inflation, so if it indicates anything (doubtful) its a more normal relationship between CPI inflation and PPI inflation, not what direction CPI inflation is heading.
CPI includes a lot of stuff that's not in PPI (including shelter and rent), so it would depend on what the components or drivers of inflation are in the CPI.
If owner equivalent rent is moving lower (which it was in October), and if prior inflation was caused by supply chain tightness or higher input costs, than a lower PPI could indicate that supply chain tightness has eased, and goods inflation will head lower or stabilize.
It's also worth noting that CPI moves slower than PPI because rents make a pretty big percentage of CPI, and rents move slower than PPI due to how the BLS measures them. It is _a_ leading indicator, but not the _sole_ leading indicator.
That's all nice abstract theory about why PPI should, in a particular model of how the world might work, be a leading indicator of CPI, but we have a history of CPI and PPI data and the fact is, PPI isn't a leading indicator of CPI. They tend to be correlated, but not in a lead-follow relationship.
I will grant that the PPI and CPI are not in a clear lead-follow relationship, for composition reasons that I mentioned above and that are covered in the article you posted.
However, the PPI can still be a leading indicator of the direction that consumer prices are moving. Here's a recent article from the Federal Reserve on this question:
> However, we also see a considerable positive correlation between lagged values of monthly PPI inflation and the current month's inflation. In particular, the correlations between current monthly PCE inflation and previous months' PPI inflation up to seven months back are all greater than 0.3. This is our first clue that PPI inflation contains information for future changes in the PCE price index.
I believe CPI is unchanged in October. I did not take a close look at the CPI numbers, but I believe the steady index is in part due to energy falling. But rents and food are increased. Not an economist, so I'm not sure how much to read into that.
PPI is a leading indicator for CPI, since it represents what producers are paying. A falling PPI would (probably) indicate lower CPI inflation in future releases.
> PPI is a leading indicator for CPI, since it represents what producers are paying. A falling PPI would (probably) indicate lower CPI inflation in future releases.
PPI and CPI historically are loosely correlated, but show no clear lead-follow relationship. PPI seems to swing harder, but not first.
Inflation will probably never be "over", since stable inflation is generally positive for growth and employment. The Fed's target isn't for 0%, its around 2% y/y
It's true, but a large gap between consumer and producer prices is hard to maintain over the long run.
It is true that there are other factors which can drive inflation and rising consumer prices. However, if the recent bout of inflation was caused by supply chain issues, or by food + energy costs rising, then a decline in producer prices would probably slow consumer price inflation.
Crossing into personal attack, as you did here, will get your account banned—especially when the account has a long history of breaking the site guidelines. We've had to ask you about this many times:
It is not "simping" to point out that factor prices have an impact on consumer prices. And while some companies do have (too much) pricing power, I wouldn't categorize it as unilateral and unchecked
i'm looking for a new apartment at the moment, and i'm noticing that prices seem to actually be in decline. vacancies are staying open, property managers are anxiously calling me for follow-up if they don't hear back, and generally have a less dismissive attitude than before
i'm not sure if it's just this city (i've moved recently) or if it's something broader
Like hell it is, my groceries doubled in price from the orange man era.
Eggs in my neighborhood went from $2-5 to now $5-10 dollars.
Inflation is only over if you manipulate the stats, the average person is absolutely reeling. Tiktok is full of videos of people asking how they are coping. Mommy net is the exact same, with people asking for diaper donations at a pace I've never seen before. I've been blessed to work in tech, so I've been donating a couple hundred bucks of diapers!
The average price of eggs hit a high of $4.83. Eggs were extremely expensive for a very short period of time, but have gone down to normal levels. https://fred.stlouisfed.org/series/APU0000708111
Trying to guess economic sentiment from TikTok is not a good idea.
Do you not understand my subpoint on how the "economy" isn't being connected back to daily life of the average american citizen, and when we do connect it back we can easily see how the numbers are being manipulated ?
You are extremely out of touch. The real world has confounding variables beyond the ones captured in your wrong model.
