What's the problem with inflation?

[zbigi]

I've just not noticed any substantial increase in food costs, or anything else other than energy. I track my spending quite closely and inflation has not really registered.

I'm not saying the figures are wrong but maybe buying more raw ingredients and less processed food means my 'basket' is different from the average basket.

I have noticed large increases in Poland, even for ERE goods. Chickpeas are easily up by something like 40%-50%. Lentils are up as well. Bread is up easily by at least 70% over the past ~3 years. Oats flakes are up 30%. Rapeseed oil is up 150%. Veggies and fruits also seem up, but they're highly seasonal, so harder to determine actual increases.

[bostonimproper]

Clearly oil-driven inflation is bad for the global poor in ways that in the West we can more or less shrug off. See e.g. fuel and food insecurity in Sri Lanka for instance.

Not sure how flexible global supply chains are such that recession/wage depression/job loss -> Westerners reduce meat consumption -> more grains available for food insecure region, but assuming that mechanisms for throttling demand were efficient, seems like a trade off worth considering. (Obviously this is not something that Western governments actually consider when making decisions as they mostly care about country-level interests, but just to illustrate that inflation represents a more tilted allocation of goods away from those most vulnerable.)

[theanimal]

I've just not noticed any substantial increase in food costs, or anything else other than energy. I track my spending quite closely and inflation has not really registered.

Likewise. I have noticed meat prices in the store have skyrocketed over the past couple years but we hunt and fish for our own supply so that is no issue. Everything else: eggs, veggies, peanut butter, cheese, beans and flour, have not or barely changed at all for us. This is in AK too where food prices are generally higher than the rest of the US in normal times.

[WFJ]

Time will tell. IMHO, inflation is by far the most dangerous aspect of capitalist-democracies, but currently treated as some kind of footnote which resolves itself with jawboning and government spending (MMT). My preference is to resolve problems quickly as time wasted can never be returned. The last 12 years were largely wasted as ZIRP propped up bad ideas and worthless companies.

For those in the US, the USD rip over the last few months is hiding the worldwide inflation (making imported goods in the US cheaper for Americans). Without the USD rip, US inflation would be 15%-20% and pain would be more acute.

[take2]

I've just not noticed any substantial increase in food costs, or anything else other than energy. I track my spending quite closely and inflation has not really registered.

I'm not saying the figures are wrong but maybe buying more raw ingredients and less processed food means my 'basket' is different from the average basket.

I think this is also due to being in the U.K. I agree with the above - my food cost increases have barely moved. However I was in the US recently and cost of groceries seemed very high to me. Certainly way higher than I remembered them being, and way more than the U.K. for comparable stuff.

Energy costs have gone up a lot in the U.K. (120% cumulatively for me over the past 3 years), but it’s a negligible absolute cost given we live in a small place. Also no car, which is the biggest impact I think.

[ertyu]

Why do you guys think it is that food prices in the US have gone up whereas in the UK they have not? Due to the interaction between territory advantage and brexit, I would expect the UK to see the higher increase

[chenda]

@ertyu - I don't know but official figures say food prices have gone up by an average of 8.5% in the past year. But a lot of that seems to have been driven by increases in certain items like dairy and processed foods, which I don't buy much of. Fruit, vegetables, coffee, alcohol and household essentials don't seem to have increased much if at all.

[Jean]

i've just read an article in german newspaper about how agricultural protectionism helped to slow inflation a lot in switzerland.

[chicago81]

Don't the published BLS inflation numbers heavily weigh the cost of housing, due to the fact that for most people in the USA, the cost of their housing is one of their biggest expenses? I think that food and energy costs are weighted to a lesser extent. This may cause a different "perception" of the inflation rate by ERE-minded folks, who's expense categories do not align well with the general population of the USA.

On a personal note, as having my primary residence completely paid off, I'm mostly only affected by the cost of taxes, food, energy, and household items.
A scant few items have "held the line" on their prices and have only risen marginally. However, the vast majority of items in those categories for me, are generally 50% to 100% higher in cost when compared to approximately 18 months ago.

[Chris]

Yes, housing is the most-heavily weighted category in the CPI-U basket.

Inflation will definitely be different for everyone, as everyone has their own basket. Also, most people's inflation rate will be "chained" in that they will make substitutes as some categories experience inflation at a higher relative rate. I find that with an ERE mindset I take significant corrective action, which results in my personal inflation being much lower than the CPI-U.

[chicago81]

Hmmm. Yeah, I agree that everybody's situation is individualized. On the whole, I'd tend to think that ERE folks might be more impacted on average, because it's difficult to substitute for lower cost alternatives (or forego purchases) if one's basket is already starting from a moderately-to-highly optimized baseline. I also think ERE folks may be less likely to be debtors (and more likely to be creditors), which also is no bueno when inflation occurs