Someone needs to draw me a picture, as I don't get it, either.

So if you are living in your car, you can afford to run the heater more often, meaning you don't need to eat as much to keep your metabolism running. Win - win, baby!

Forgive the emoticon hyperbole. I couldn't decide on just one.

Except for eggs, and that was because of the virus.

Chicken in particular seems to have gone up.

We have Giant and Weis Markets within 3 miles. Weis has a lot of BOGO sales. Giant has fresher produce.

Mixing in the pre-amortized price of US-sold 8-track tape players lowers the price of a gallon of milk by waaaaaay over 10-percent.

Housing has more than tripled. Wages.....nope. But there's no inflation.

Food prices are much more volatile than lots of other prices. For example, egg prices are being affected by disease outbreaks limiting egg supplies. That will be gone a year from now.

Whether or not you "feel" inflation is a combination of what you buy and what you notice. If you are buying stuff that is very different from the CPI "basket", you will experience different inflation. For example, older people have more medical expenses than the CPI "basket", and medical costs has gone up by a lot.

Perception is another big issue - We remember "Wow! Milk is so expensive" better than "Wow! Milk is so cheap".

Is inflation actually low? Yep. Both CPI calculated by the government, and the "Billion Price Index" calculated by private groups agree that inflation is low for average consumers. (The Billion Price Index was created by people who a: wanted a bigger basket to be more accurate, and b: didn't trust the government's numbers)

If you are not an average consumer (for example, you're spending a significant amount of money on drugs and medical care or you are paying rent in a hyper-expensive city) then your results will be different.

nt

Grocery bills, rent. You know, the things people require to live, which have all gone up. I know the federal reserve likes to have a basket of goods in which they pick and choose which goods to include in order to show whatever inflation rate they want. But that doesn't reflect anyone living in reality (maybe you live else where?). Food and rent (or housing), are way up year over year.

Gas being down is currently a temporary outlier, and its funny that they now seem to be including that in the CPI basket (at least that's what I'm gathering), because it sure as hell was not included in the basket when it was going through the roof about 8 years ago.

Like gas and heating. But you are not up in arms about those.

First, it's the Bureau of Labor and Statistics, not the Federal Reserve.
Second, the "basket" does not change significantly year-to-year.
Third, the billion price index, which obviously has a much larger "basket", shows the same results.

So how, exactly, did they "fix" the basket to hide inflation for the last 7 years, and manage to get the billion price index to agree?


Yes, it was in the basket 8 years ago.

Here's what's in the basket: http://www.bls.gov/dolfaq/bls_ques3.htm
Here's an article talking about what changed over 2013 to give you an example of how prices affected the price of the basket: http://www.businessinsider.com/breakdown-of-consumer-price-index-basket-2014-1

message is eat cheaper food, kitty can lickers!

only those numbers on the ticker and the price at the pump...

Food prices are high. I work in a grocery store and things are getting pricey.

Welcome to DU!

http://bpp.mit.edu/usa/

I buy a carton of mixed fruit that lasts me 2 days about
And it's almost $5.

The cans of Bush's beans were about $1.19.

Food prices are through the roof.

But gas is under $2 this morning.

"It's a big country why does food cost so much?"

I was in Germany for three years and I remember being able to buy delicious bread, cold cuts, cheese, at very good prices. It really pisses me off that groceries are cheaper in Germany than here in the U.S.

http://www.prwatch.org/spin/2008/11/7971/sneaky-manufacturers-shrink-packaging-while-keeping-prices-same

IF a product changes size or changes in quality, then that change is adjusted for in the CPI calculations. So for the peanuts, the change would be looked at in change of price per ounce.

The "Arab spring" was due to price increases in food stuffs there. Much of the middle east pays upwards of 30% of their income on food. We don't usually reach those levels here.

It's a bit complicated, but inflation rates are actually different for those of different levels of income. But our overall consumption is "blended" and then the changes in components are figured to generate the CPI.

The sampling and blending done is based on a survey, which is always out of date.

And then there's the way it's calculated. If, for example, food gets expensive and many people cannot afford to buy the same quality food as the year before, when the new survey is conducted the "mix" used to calculate food inflation will be adjusted to show the lower-quality purchases, thus hiding real inflation.

The current survey is for 2014.

And what happens is easy to tell from these summary tables:
http://www.bls.gov/cex/2013/research/allcuprepub.pdf
http://www.bls.gov/cex/2014/research/allcuprepub.pdf

If you go to page 4 and look at steak, you see that in 2013 11.68% of households bought it, and in 2014 10.59% did. So those households switched to cheaper options. But that is recorded as less inflation (they are using the aggregate purchases for each year).

So, using this method, if 20% of the persons can't afford their asthma inhalers this year due to increased costs, those costs will drop out of the calculation of inflation altogether. In other words, the poorer we get, the less it shows in the inflation stats.

Or go to page 8, and look at canned beans. This is an animal protein substitute. In 2013, 10.57% bought them. In 2014, 13.02% bought them. Clearly people were having problems affording food - tastes just don't change that much in a year. But when inflation is calculated, it will be calculated using more beans and less of the more pricey chicken and beef.

And none of that even captures the escalation in the price of eggs this year, or chicken.

Another way to assume the extreme pain is by looking at stuff that we want to buy in the grocery but is not absolutely essential. Cola is a good one. Go to page 11. In 2013 28.6% of the households bought it. In 2014 25.72% bought it. Close to 3% of households simply couldn't afford it any more. If you go to page 2, you'll see very similar drops for cookies - again, some households just couldn't afford these items any more.

First, substitutions aren't always towards a cheaper product...they're towards what has a lesser change in price. For example, I prefer rib-eye to sirloin...but not $2/lb more. So if rib-ey is $2/lb more than sirloin, I'll go for sirloin. But if sirloin went up $1.50/lb and ribeye only went up $0.50/lb, then the difference would be $1/lb and I'll spend that much more for rib-eye, even though sirloin is still cheaper.

Second, when the weights change, the change is adjusted for to maintain a constant standard of living. Let's say there are 2 kinds of candy bars: peanut and chocolate. Both cost $1 each and our consumer buys 2 chocolate and 2 peanut bars each week. Average price is $1. But then there's a severe cacao blight and chocolate bars shoot up to $4 each. What's the change in the average price of candy bars?

If we assume the consumer doesn't change his buying habits and still buys 2 and 2, then his new price would be $4 + $4 + $1 + $1 =$10 for an average price of $2.50...a $250% increase.

But what if he did change and now buys 1 chocolate and 4 peanut bars? If we use 1 and 4 as the basis of his standard of living, then he would have spent $5 and now is spending $8.....for an average of $1.60.....a 160% change. So which is right? Well both are. Going from 4 each to 4 each is a 250% increase and going from 1 chocolate and 4 peanut to 1 chocolate and 4 peanut is 160% increase and neither case has a change in the standard of living. So to account for the subtitution, we take the geometric average and the square root of 2.5*1.6 is 2 and we record a 200% increase in price.

This way substitution is accounted for but standard of living remains constant.

...goes up 300% in a short period, and a new family can no longer afford it so they have to either rent in that neighborhood, or buy a house in a very dangerous neighborhood. The geometric mean of spending $0 (not buying the unaffordable house) and $0 (not buying in a bad area) means there was 0 housing inflation. The family is maintaining a constant standard of living by renting in the better neighborhood, and putting money into the landlords back pocket.

What is the inflation rate on koolaide right now?

That's not how it works at all. Housing is calculated quite differently in order to eliminate the investment portion of buying a house. In any and all cases, your example is just wrong. If houses go up 300%, then rent is going up as well.

Its typical that when house prices go up rent does as well. An example where they diverge is easy to come up with... once you reach a house price level that prices out all of the median income earners, it doesn't matter if housing stays flat. Rent can and will go up until people just start leaving the area.


edit: I misread something you wrote and deleted the first couple sentences

Its typical that when house prices go up rent does as well.

That's what I said. So how can you say my post was absolutely not true when you're agreeing with me?

that inflation calculated using your candy bar example doesn't apply to the biggest expense in nearly EVERYONE's budget... rent/housing.

Inflation in rent/housing is a direct increase in inflation that every renter/home purchaser feels. Substituting different housing options while maintaining the same standard of living doesn't fit into the candy bar example.

The way you posted it sounds like you are just explaining how the gov. calculates inflation. That is fine, you don't control how the gov. does their calculations. I'm just pointing out that real inflation, felt by average people living in this country, is completely different than what the gov. numbers tell us. And the majority of posters in this thread feel the same, based on their every day shopping experiences.

I could be wrong, but the difference is very noticeable and this is despite the fact that I switched from buying pre-made food to making food more or less from scratch. I shudder to think what my food bill would be like if I was still buying frozen pizzas, hot pockets, deli chickens, frozen dinners, etc... I look at those things everyonceinawhile and I just can't imagine how anyone who doesn't have time to cook manages.

Meat and some things are up and down, but not a big swing. Eggs aren't cheap, for sure, but I have chickens so I get mine from the back yard. While milk is pretty cheap, I noticed butter was way up the last time I was in.

We don't get a lot of fresh fruit and veggies, because our budget is so tight, but I get what I can. This year we got about a dozen good pears from the tree in the back yard (one didn't produce, for some reason), the blueberry bush did well, and I got some squashes, zucchini, tomatoes and okra from my brother's garden.

Next year, I'm hoping to put in a couple of apple trees, and I have some pits I want to start for cherries. Another blueberry bush would be great, and some more strawberries. With any luck, my seedlings will live and I can do more in the garden (my brother has limited tastes, so isn't willing to grow more stuff).

I also cook mostly from scratch, which I think helps a lot. Not only do I save money, but even if the cost is the same, I'm getting less chemicals and other junk by buying basic ingredients. I don't think it's any harder than following box directions, either.

have only grown a few feet high and only produce maybe two or three handful of berries. What am I doing wrong?