And CPI is "Consumer Price Index", aka inflation measurement.
For anyone unfamiliar with the title. (Like me)
The BLS does document their process in detail on their FAQ [0].
This might not match your experience because your family doesn't shop the same basket of goods the families the BLS surveyed do. There are also regional variations in the prices of goods. Even store prices in the same region vary. All of these variations get averaged out.
This is why you can't extrapolate from n=1.
All-items was 3.7%. That does not mean components with-in the overall rate were also 3.7%. Particular components may have gone up more that the overall rate, but only a fraction of that is part of the all-items that is seen in the headlines.
Further, if your personal basket of goods is most likely different than the average basket of goods mix, so your personal inflation rate will be different from the headline number. StatCan, who does the CPI for Canada, actually has a tool for finding out your personal inflation rate based on your purchases:
* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...
The idea that the government would cook the books in their favor isn't outside the realm of possibility. The idea that it's been happening for 40+ years is worrying.
There's lots of data out there, for example: https://prices.marketreportblog.com
For example in the EU, while good insulation has always been a given in the Nordics for obvious reasons (although modern buildings are even better!), it's only relatively recently that these topics have started to be taken more seriously in the south. Energy costs were generally affordable, and there wasn't as much focus on the environmental side of things (i.e. using energy more efficiently to reduce pollution or switching to cleaner energy sources).
Just trying to shed a positive light on all of this, even if things are gonna suck for a while.
The ideal way inflation should come down is increased capacity and/or lower government spending
All I see lately is that for example macro numbers adjusted by inflation seem to tell a story of increased purchase power, but reality seems a bit.. different? dunno.
Generally, it's fine if it's the little guy who pays the price. So true in so many areas.
Convenient how it doesn't also include housing cost increases, as if that's not part of day-to-day living, like we're all snails carrying our house on our back we got for free since birth, when housing costs are possibly the highest burden on most young workers now.
Edit: I am wrong
(Emphasis mine)
> Convenient how it never tracks housing cost increases
I think that is included in shelter. I might be wrong.
To be fair, this is a really common myth. Unless you actually read the BLS methodology, you wouldn't have known. And in most places, anyone attempting to combat this myth is met with down votes.
It does, but only urban renting. It doesn’t measure increases in housing costs for suburbs directly. In particular it does not track increases in home values or mortgage payments for new buyers based on current rates.
But I am afraid this is what they will do to screw the democrats after they take the house and the senate and then blame the market crash all on them.
Sure you can. Make it expensive to finance buying oil and fertilizer and demand for them reduces.
Why?
Restaurant prices are absolutely out of control. My local Chickfila is no longer wrapping cars around the parking lot. They might still be putting up good numbers via expansion but there is no way the per-store economics are trending well.
I remember when it was arguably cheaper (especially once you factor in your time) to go buy off the Taco Bell value menu. You could get a bag of burritos filled to the top for like $12. This will hardly purchase a single menu item today.
It feels like we are in some kind of fast food death spiral right now.
A cheesy bean and rice burrito (404 calories) is $1.49.
Not only are there no single items anywhere close to $12, there are seven combos (that include a drink) for under $12, and the most expensive ones are $13-14 (excluding group combos).
My typical order costs $8.48 with tax and includes two crunchy tacos, a beefy 5-layer burrito, cinnamon twists, and a medium drink.
Starvation in the US is highly unlikely. The country's farmers produce far in excess of what's needed to feed the population. Other countries are not so lucky and they are already facing hard times.
[0] https://londondaily.com/climate-activists-glue-themselves-to...
Home prices themselves aren't really used, because they're based off of interest rates, land values, and many other attributes that don't really apply to CPI. Rental costs for all of their faults, are a better measurement of month-to-month or year-to-year inflation.
So you're right. They don't really include "house" prices. But they absolutely include "housing" prices.
My experience with people complaining about CPI is usually simply that the numbers don't match their feeling.
Looking at the description [1] is really interesting:
> The shelter component of the CPI includes two major items: rent of primary residence and owners' equivalent rent (OER). Rent of primary residence, or simply rent, refers to the cost of renting a place on the market. [...] OER refers to the amount of rent that a homeowner would be paid if they were renting out their own home in the market. [...] is calculated by splitting the non-recurring cost of buying a home real estate into rental payments
I got a bit tired reading [2] for more details, as it isn't even my countries CPI...
> The expenditure weight in the CPI market basket for OER is based on the following question that the CE Survey asks of consumers who own their primary residence: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?”
Left me a bit unsatisfied, but I'll keep it at that. The followup question would be how much rent prices deviate from housing prices. I am sure that has a lot of data though.
[1] https://en.macromicro.me/charts/24/cpi-house
[2] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
Not al all in this case. This is all caused by lower physical supply of oil, gas, diesel and fertilizer from the Iran War. Tightening the money supply will not fix this.
Thing one, low interest rates result in higher availability of money, causing prices to go up due to increased monetary supply.
Thing two, scarcity of a resource (diesel) causes price of that resource to go up. The resource happens to run the backbone of our economy, so most other prices go up as a result.
These are not the same, as the first is the weakening of the currency against some theoretical static "value", and the second involves the currency keeping its same "value", and instead it is the goods themselves which require more of that value to be produced/sold.
The end result (prices up across the board) is the same but the mechanism is very different.
Reducing money supply will reduce the amount of money available to spend on oil, gas, and fertilizer, thus reducing the demand of those things to match the lowered supply.
People and businesses need to buy gas and oil. It is not discretionary spending. They also need to buy food, and food prices are not higher because of the money supply, nor because people are buying more food, they are higher because oil prices are higher.
Also, all that lowered spending you cited will mean closed businesses and economic collapse. Say goodbye to AI as well.
You cannot control inflation caused by a supply shock by rising interest rates.
If you bomb your supply chains, no amount of interest rate manipulation will make it come down (supply shock through destruction of capacity)
If you make all doctors/lawyers to undergo recertification, medical costs will skyrocket (supply shock through regulation)
If you deport all your construction workers, bringing construction to a screeching halt, housing costs will skyrocket (supply shock through xenophobia)
tl;dr The Big(0) cause of inflation are capacity (supply) and other stupid governmental responses to it. (printing more money)
Interest rates actually come way below these factors.
Interest rates will never discourage corrupt governments from printing (borrowing) more money and giving them to the mass .
If you bomb your capacity to produce oil and consumers must pay more for oil that money comes from elsewhere i.e less video games. That is simply a price increase not inflation. It would like confusing the weather and climate. Inflation is defined as the "general increase in prices".
If you add money to the existing finite amount of money you get inflation.
Not all of it is non-discretionary - as in people die or get hurt if it doesn't happen. Definitely not in developed countries. I've already described what "bare minimum" use looks like, and rich countries are nowhere near that.
> Also, all that lowered spending you cited will mean closed businesses and economic collapse
That is correct. It does, however, "fix" inflation. When more people are poorer, they have less money to spend.
> You cannot control inflation caused by a supply shock by rising interest rates.
Supply shocks can always be dealt with by destroying demand. This may result in a degraded quality of life. But it will fix inflation.