That there is inflation, no one denies. To some extent people debate what the actual rate of inflation is (depending on which group you belong to and how you think that it will influence things) and what is used to calculate it (how, for example, things like food and energy are not included - when they are something everyone pays for every month - is beyond me). But no-one denies that currently we are in an inflationary cycle.
A simple exercise: by the end of 2021, the inflation rate was 7.0%. Super cool if you are in one of those industries that is capturing that price increase; not so cool if you are not. In my case I am not, and so my ability to spend shrank by 7%. No big deal, some would say: after all, that is a pretty minor number and y you are sure to make it up next year.
Except, of course, if you do not. In my case I definitely will not: my pay is "in place" for the duration and any interest on any short terms cash I have is sure not at that right (as most of you know as well, 1% or less than that is the norm).
Now, inflation is readily apparent in my own life. Fuel is more. Food is more. Dining out is definitely more (at the rather shocking rate of the increase, we actually find we are dining out far less simply because it seems foolish to waste that kind of money). Just doing an back of the hand guess, I suspect I am seeing evidence of it in 60% of my life, if not more.
Of course, I am a rational economic creature. When things become more expensive, I find ways to either find alternatives or do without. On the whole, I can pretty much go without a lot of things. But that does have a rather nasty downstream impact on those that I used to buy them from. Enough people like me, and things start going out of business. Which has its own set of issues.
Were I a member of Our Political And Social Betters (OPASB), I would be paying a lot of attention to this. Sadly - and given their actual abilities - I fear they whatever cure the administer will make the disease pale by comparison.
Which, I suppose, is fine. A great many of us are learning how to live on less now, to beat the rush.
The Cheatwood Index is a bit more accurate. The .gov would have to increase entitlements by the amount of inflation, and doing so would end those programs, so they lie. It's what they do.
ReplyDeleteI did a little reading on the Chatwood (?) Index. Actually, I went both to the website as well as an article posted by someone that had questions.
DeleteI think the difficult with the nature of inflation versus CPI versus "core inflation" (excluding food and energy) is that the theory does not match reality. One can state that 7% inflation is not a problem, but the experience in the grocery story quickly convinces one otherwise. It seems to be a case of theory versus practice.
I am fortunate in that inflation hasn't really affected me much. Our food bills were always a small fraction of what most of our peers claim to spend monthly. I have always assumed is that we mostly fix our own foods from scratch and that includes a lot of staples like rice and beans which hasn't risen as much. I do notice the total price for our weekly grocery trip has gone up dramatically but still, it is less than what most of our peers were spending before this inflationary rise.
ReplyDeleteAs for other aspects in life, my moto has always been to pay myself first by maxing retirement accounts, pay all the bills and then invest what is left towards an earlier retirement. We are fortunate in that we can still do the first two things and the only thing that has suffered is how much money we put towards the earlier retirement goal.
But I am not tone death and realize that I'm fortunate and that this is hurting a lot of people. The upside is that similar experiences influenced my grandparents generation greatly and that rubbed off on a lot of their children so perhaps if we now become smaller consumers, perhaps the next couple generations will show this trait as well.
Ed - We are seeing the same impact as the true variable expense we have is food and household items, including clothing. Our utilities run in narrow windows, our cars are paid for, our mortgage is locked, and our fuel usage in terms of miles has not been this low in 30 years.
DeleteIt is going to impact people. It has too. Fortunately for my children, they are already on the save money/thrifting bus, so hopefully they will be well positioned for what is undoubtedly going to be a long, bumpy ride.
My wife is a CPA, she does this for a living. Our household is seeing a 40% inflation rate. Our sons, narrowly missed the massive rise in rent due to the timing of their lease, so their 40% could jump to a 60/70% in the next lease cycle.
ReplyDeleteThat our "government" can rob us through inflation is a crime worse than Tea Tax. Corporation USSA can not meet its obligations and has declared war against us in word and deed.
Oh, I bet you certainly do if your wife is in the industry Just So. I do not think we have enough granularity to calculate it - although we will be spared from next year's college rent hike in that she will be staying at home next year.
DeleteOdd how people do not see the government as stealing from them the same as a physical thief.
Sadly, wrecking the economy is what the socialist demonrats want.
ReplyDeleteEven more sadly, Linda, the madness seems universal. The Red Party has also proved seeming inept at managing such things. Once upon a time it used to be a strong campaign position for them; now the question is "who gets us to the bottom faster?"
DeleteThis is the bill coming due. Or, at least the first invoice.
ReplyDeleteJohn, the first of many invoices, I fear.
DeleteThe ghastly part is that my memory actually goes back far enough to remember the 1970's. I do not remember us at all being poor as we always had enough, but what we did not have is the sense of luxury that seems to permeate everyone's expectations of their lives now. For at least two generations, they have only experienced rising standards of living and the power of the US economy meaning that we had access to everything, cheaply. When this starts to fail and crumble, what will they do?
I didn't realize that the cost of food prices isn't considered in determining the inflation rate. I'm suddenly realizing I don't really know much about how it is figured. Something new for me to learn about! Whee.
ReplyDeleteFortunately, I enjoy cooking (except for days when I don't). When I see foods that we normally eat rising in cost, or don't find them on the shelves or in the store refrigerators I know I can substitute other things easily enough, and I know I can make more things from scratch, and even have a little fun in the process. Hmmm... maybe I should focus on THAT for my One New Thing challenge...
I'm old enough to retire thoughts of gardening, but the new place we're in came with a nice size garden - with a couple of perennial crops that will be very nice come spring. I'm finding myself feeling motivated to plant some things I have experience in preserving, and maybe even trying my hand and some new things. Inflation alone can be the impetus for new things to spring forth. You've given me ideas, TB.
Becki, the whole thing is a confused mess (at least to an outside observer). You have "inflation", then you have "core inflation" which seems to exclude energy and food. The reasoning as presented is that food and fuel are too "volatile" to truly be good measures - which I suppose I get on one hand, as a single bad year can make a crop unexpectedly expensive or a world event which upset the oil supply (we are old enough, I think, to remember OPEC at its heyday). Still, fuel and food are what influences people's lives the most on a day to day basis. If the cost goes up, it is readily apparent - and gets pulled from elsewhere.
DeleteI am a big fan of gardening, no matter what the effort put in - good heavens, I have had years where all I get is garlic! - and think (for any number of reasons) it is a good practice. And the other skills you name - cooking from scratch, preserving - are ones that I have tried on a small scale but need to do more of. As Ed says above, one potential outcome of this may be a whole new generation learning the way of thrift and self reliance.
And as for the new ideas, you are of course welcome - and again, kudos to the Social Internet for making this all possible.
I am not much on economics, meaning I don't understand much about it, other than I know when costs are going up. I see that mostly at the gas pump, which causes me to be grateful I drive very little locally anymore since I came home to work two years ago. Unless I'm driving out of town to see one of my adult children and their families, I might go a month between fill-ups of the gas tank. As for eating out, if it were up to me, I would hardly ever do so because I much prefer eating at home. My wife disagrees so, as it is with so much of marriage, we compromise. She's an excellent cook, but in our empty nest years, is not nearly as interested. I can get by, but I have a limited repertoire.
ReplyDeleteBob, I am limited economic man, but I do get that when fuel prices go up everything goes up, because we are dependent on fuel to deliver everything. Why this simple mystery escapes so many is, well, mysterious.
DeleteI can go three weeks between fill ups now, which is one week more than before The Plague. I do top off every week, both to keep the car full as well as to beat what seems to be increasing fuel prices every week. It is literally like I am saving money.
I prefer to eat in; The Ravishing Mrs. TB prefers to eat out. We, like you, have learned to compromise. To be fair, I am much less of a formal meal person than my wife, so when she is out my cooking is of the simplest kind, or whatever I can find as leftovers or easy to make foods.