Inflation Observations

dot_com_vet · Post by **dot_com_vet** » Mon Aug 27, 2012 2:43 am

I've noticed costs of my major expenses are rising more than I expected. Are you seeing this too? Maybe I'm just paying more attention now.
- Car and house insurance up 10% in one year.

- Property taxes up 3.5% in one year. (With continuing falling property value.)

- Childcare up 5% in a year.
On a good side, the cost of a DIY oil change is down 5% for the same parts. Maybe I just caught a good sale.
Putting my checking register into a spreadsheet is fascinating for tracking expenses.

secretwealth · Post by **secretwealth** » Mon Aug 27, 2012 2:51 am

Inflation is lumpy for sure. IMO, any cost that comes from a central authority (insurance firm, hospital, government) will rise higher than costs coming from a more open market (food, entertainment).

mfi · Post by **mfi** » Mon Aug 27, 2012 7:52 pm

The Billion Prices Project @ MIT
http://bpp.mit.edu/usa/

Maus · Post by **Maus** » Mon Aug 27, 2012 10:51 pm

I laugh everytime I hear a radio announcer saying the CPI increased only modestly once the volatile energy and food aspects were eliminated. For most EREistas, the energy and the food are our primarily consumer expenditures. Here in CA gasoline has experienced a short-to-medium term spike because of the refinery fire in Richmond. And the impact of the drought on corn and soybeans is going to bring higher food prices this winter. It'll be interesting to see if corn-fed factory cattle reach parity with grass-fed beef. In any case, the Paleo eaters are probably in for some sticker shock.

Christopherjart · Post by **Christopherjart** » Mon Aug 27, 2012 11:43 pm

about 5% inflation here.

altoid · Post by **altoid** » Mon Aug 27, 2012 11:53 pm

The good price has at least gone up 20% for the grocery store I have been. Like a jump from $1.79 to $2.20. Does this mean it is time to buy TIPs? I mean the interest rate we earn is probably lower than the CPI...

Mo · Post by Mo » Tue Aug 28, 2012 1:29 am

I'm with Maus, I think the so-called "core inflation" (i.e. without energy and food prices) is laughable. When you take those two things out it seems to be that you're taking out the two most important things usually included in the inflation metric.
WRT the drought, either it was overblown by the media, or food prices will go up markedly quite soon. We'll see... Anybody invested in a freezer and a bunch of meat due to the drought?
@altoid, TIPS... those things can be hard to play right. The phantom income is one aspect, the paltry return is another. A few years back Warren Buffett said that he thought TIPs were a good value at that point. I keep watching to see them get anywhere close to that again. Not yet...

dot_com_vet · Post by **dot_com_vet** » Tue Aug 28, 2012 3:03 am

Cost of Subway sandwich - up 20% over last year.

JohnnyH · Post by **JohnnyH** » Tue Aug 28, 2012 3:28 am

Never trust the government responsible for the inflation to accurately report the inflation ~something like that crawlingroad
I see no scenario in which TIPS will win.
I'm not enthusiastic about it, but the more I learn the more I see gold/silver as the foundation to a financial future:

1) above, 2) cash, 3) bonds, 4) equities.

dragoncar · Post by **dragoncar** » Tue Aug 28, 2012 3:49 am

The dragoncar FPI (fatass price index) is holding steady:
$2 buck chuck... still $2

$1 menu at McDonalds... still $1

Riding the escalator instead of taking the stairs... free

JohnnyH · Post by **JohnnyH** » Tue Aug 28, 2012 4:07 am

@dragon: lol!!

However, the quality/quantity of those items has declined readily... Meanwhile, industry helps hide CPI inflation figures by increasing productivity.

dragoncar · Post by **dragoncar** » Tue Aug 28, 2012 4:17 am

JohnnyH: I agree, the shadow operators have been slowing down escalators for years. They keep the speed changes just small enough to go unnoticed... quite insidious

44deagle · Post by **44deagle** » Tue Aug 28, 2012 6:48 am

It's plain evil that risk free returns are lower than inflation rate. Nothing more than theft.

Roark · Post by **Roark** » Tue Aug 28, 2012 5:44 pm

Present CPI calculated using the old measures, before a lot of the hedonic adjustment changes were added in.
http://www.shadowstats.com/alternate_da ... ion-charts
If food and energy rise the most, it may help to get self-sufficient as much as possible in each. The energy industry is so incredibly efficient compared to what one can produce on their own, but you might be able to look into free waste oil sources for heating, or the rocket mass heater that Jacob posted if you have access to free wood. At least you would be able to reduce the portion of energy used on heating, assuming you've already made conservation attempts through efficiency or whatever else (not all conservation attempts are economically worthwhile).

Roark · Post by **Roark** » Tue Aug 28, 2012 5:47 pm

I'd favour gold to TIPS too, considering the incentive structure involved. When inflation was heating up about a year ago during QE2, there was talk of moving to a chained CPI. I imagine the next time inflation is high enough for people to start complaining, the government will switch to the chained CPI for official statistics, or at least for COLA's for SS.

Maus · Post by **Maus** » Tue Aug 28, 2012 6:46 pm

@dragoncar

Don't forget that inflation is not always reflected in price WRT food items. Does everyone remember 6 oz. cans of tuna, now 5 oz.? Whenever I think I'm seeing a good deal, I check the contents label to see unit price. Sneeky corporations, very sneeky...

JohnnyH · Post by **JohnnyH** » Tue Aug 28, 2012 7:54 pm

@Maus: yep... The $1 McDonald's burrito is hilariously small.
Inflation is evil genius incarnate. Not only will every corporation work to hide the inflation for you but you get to tax fictional gains caused by rising prices.
Gotta love fiat.

dragoncar · Post by **dragoncar** » Tue Aug 28, 2012 8:08 pm

I was joking... I know full well about the "grocery shrink ray" (as the Consumerist calls it).
The upside is that people are eating healthier sized portions

Radamisto · Post by **Radamisto** » Sun Sep 09, 2012 5:16 pm

Considering how fast the money supply is increasing, it's surprising the prices aren't rising even faster. And of course the official statistics are laughable...

Post by **jacob** » Sun Sep 09, 2012 5:24 pm

@Radamisto - The money the central bank is pumping out get stuck shoring up the balance sheets of the banks. Thus the rest of the economy doesn't see the money. Only paper assets are inflated.