Not so hidden inflation

[SD Realtor]

We have had this conversation before Brian. Of course the items you mentioned are cheap. Not so sure they are as crucial to life as food, fuel and basic staples.

I believe in my quickbooks and quicken ledgers alot more then what the government tells me. I believe that statistics are quite easily manipulated. I don’t believe anything the government tells me regardless of who is in power. Other people lap up government stats because they actually believe that the government is actually looking out for them.

I don’t think it matters what interest rates do. Behavior of bubbles is trivial to understand. They all inflate according to what can and cannot control. The govt cannot control prices of basic foodstuffs and other basic goods. the govt has been doing backflips to keep a lid on treasuries with fantastic success. I do believe interest rates will rise someday but it may be a year or it may be 10 years.

However I am not coupling the price increases with the basic things we need to live on with interest rates.

[The-Shoveler]

Well as long as you don’t have to eat, (I could lose a little weight anyway).

I guess it’s a good time to be a farmer (as long as you have owned the land a while and you can control your other cost, water etc…).

What I am seeing is there are just a lot fewer sale items available, where as you used to be able to cut your food bill by just buying whatever was on sale that day and forgoing whatever was not on sale. Now it’s a lot harder.

[Anonymous]

Anecdotal pricing information is extremely subject to confirmation bias.

Most people notice when prices go up, but not when they go down.

If anyone thinks that the CPI numbers are not accurate, then let’s discuss potential flaws in the methodology.

And let’s not even mention shadowstats. If I’m reading the chart on their homepage correctly, they claim that inflation since 1990 has averaged 7.5% or more. Easily debunked with a little common-sense analysis.

7.5% compounded over 22 years is a factor of five. Things today are not five times more expensive than they were in 1990.

More on the junk shadowstats data:

http://traderscrucible.com/2011/02/01/why-shadow-government-statistics-is-very-very-very-wrong/

[sdrealtor]

Here’s a real data point. In 1999 I used to eat at Borelli’s a few times a year. Its a very run of the mill family owned italian place in Encinitas. Not fancy in the least. I always ordered Chicken Parmesean dinner which includes side of pasta, steamed veggies, garlic bread and a salad. It used to cost $7.95 back then. I hadnt been there in years and went there last week and it was $15.95. Nothing about the food has changed except the price which doubled. That seemed quite expensive to me.

[Anonymous]

[quote=SD Realtor]I believe that statistics are quite easily manipulated.[/quote]

Just to reiterate my point from above:

You are correct that numbers can easily be manipulated. But only for a year or two.

Remember, inflation is compounding. If the numbers are consistently biased by just a few percentage points every year, the effect would snowball over a few years. After 10 years it would be impossible to notice. After 20 years the numbers would make no sense whatsoever.

Maybe the government cheated a little this year. Maybe they cheated last year also. But it is mathematically impossible that they have cheated all of the past 20 or even 10 years.

[Anonymous]

[quote=sdrealtor]Here’s a real data point. In 1999 I used to eat at Borelli’s a few times a year. Its a very run of the mill family owned italian place in Encinitas. Not fancy in the least. I always ordered Chicken Parmesean dinner which includes side of pasta, steamed veggies, garlic bread and a salad. It used to cost $7.95 back then. I hadnt been there in years and went there last week and it was $15.95. Nothing about the food has changed except the price which doubled. That seemed quite expensive to me.[/quote]

The word got out that you were eating there and the place became very popular.

[SD Realtor]

Agreed pr. To my point exactly. I think what we have seen over the past 10-15 years are a few bubbles in series. A bubble would inflate, then pop or deflate rapidly, only to inflate another bubble. I don’t believe that prices have been wildly rising for 10 or 20 years. I think that the prices I am noting have been moving upwards for the past few years now. Maybe 2-3 years. To me there is still a few years of paper mache the govt can apply to the issue with selective statistical gathering and reporting.

[an]

Here’s another data point. In 1998 a gallon of regular gas was ~$1. Today, that same gallon is ~$4.

[briansd1]

[quote=SD Realtor]
However I am not coupling the price increases with the basic things we need to live on with interest rates.[/quote]

Yes, I would agree with this.

I think the effects of globalization are taking effect.

Food needs to be grown and is more limited in quantity. There is a higher world demand for quality food. Is is also more demand for ready to eat food, such a pre-washed salad. The stores are nicer and remodeled, so there is a service component added to the price of food.

As far as other basics such as Tide go, the “reputable” brands have more pricing power because people are reluctant to switch.

Other consumer products have become such widely available commodities that prices are dropping relative to incomes.

[all]

I barbecued my pet beta fish when the time came to buy more food.

[Anonymous]

[quote=AN]Here’s another data point. In 1998 a gallon of regular gas was ~$1. Today, that same gallon is ~$4.[/quote]

Pro tip: If you destroy one of the top oil-producing nations, it may have an effect on gas prices.

[an]

[quote=pri_dk][quote=AN]Here’s another data point. In 1998 a gallon of regular gas was ~$1. Today, that same gallon is ~$4.[/quote]

Pro tip: If you destroy one of the top oil-producing nations, it may have an effect on gas prices.[/quote]
How do you explain the price of Milk then? IIRC, milk was around $1 in late 90s and now, they’re mid $3.

[Anonymous]

[quote=AN][quote=pri_dk][quote=AN]Here’s another data point. In 1998 a gallon of regular gas was ~$1. Today, that same gallon is ~$4.[/quote]

Pro tip: If you destroy one of the top oil-producing nations, it may have an effect on gas prices.[/quote]
How do you explain the price of Milk then? IIRC, milk was around $1 in late 90s and now, they’re mid $3.[/quote]

http://future.aae.wisc.edu/data/annual_values/by_area/301?tab=prices

Milk price in 1995: $2.50
Milk price in 2011: $3.60

Annual rate of change: 2.3%

[NotCranky]

You could just steal your soap.

http://www.chicagotribune.com/news/nationworld/la-na-nn-tide-thieves-20120313,0,5461408.story

[sdduuuude]

Surely, the dollar will surely collapse soon, right ?

[Author]

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