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> [anecdotes] That's not how inflation works or is determined. Instead go to your country's office for statistics Web site. FWIW, here that's 0.3% inflation o

by bmn__ 6y ago

> [anecdotes] That's not how inflation works or is determined. Instead go to your country's office for statistics Web site. FWIW, here that's 0.3% inflation on food and non-alcoholic beverages, 1.3% in total from 2020-06 to 2020-12. Both numbers are ordinary/close to expected. To see an inflation of 30%, I have to take the difference to 2007.

blackrock 6y ago
You misread my comment. I didn’t say it was 30% across the board. I just claimed I was seeing a 30% price increase, for one product item. Now, you can choose to not buy that item, in which case, the price increase doesn’t impact you.
- UncleMeat 6y ago
  But it is one product. Isn’t it far more likely that seasonal variation in apples is what triggered the price change, not a devaluation of the dollar?
anonu 6y ago
Actually it is how inflation works. The BLS actually goes out and buys a basket of household items and groceries at regular intervals across the USA
- taylodl 6y ago
  The key to remember is it's not the same basket of household items - they provide for substitution. Apples are too expensive? Maybe they'll be replaced with grapes. Beef is too expensive? Maybe it'll get replaced by chicken. They substitute items in such a manner to keep the inflation index as low as possible. That's important because social security checks are adjusted based off that inflation index so they're motivated to keep it as low as possible. As you can imagine people claim this doesn't reflect true inflation as we're not necessarily comparing apples-to-apples (ha!) and it also excludes energy costs.
  - jfengel 6y ago
    I don't see anything wrong with accounting for substitutions. If beef is too expensive this month, then people do switch to chicken. They haven't lost anything. It would be false if somehow this became an infinite treadmill where the basket went from beef to chicken to lentils to sawdust, but that's not what happens. The substition smooths out short term changes in price the same way people actually do. The economy acquires robustness through this redundancy, and the CPI measure reflects that. It's far from a perfect measure, but its failures aren't caused by the perfectly commonplace action of buying the cheapest goods today. Insisting that it has to be precisely the same goods would indeed be a distorted measure of the economy.

by bmn__ 6y ago

blackrock 6y ago

You misread my comment. I didn’t say it was 30% across the board. I just claimed I was seeing a 30% price increase, for one product item. Now, you can choose to not buy that item, in which case, the price increase doesn’t impact you.

UncleMeat 6y ago
But it is one product. Isn’t it far more likely that seasonal variation in apples is what triggered the price change, not a devaluation of the dollar?

anonu 6y ago

Actually it is how inflation works. The BLS actually goes out and buys a basket of household items and groceries at regular intervals across the USA

taylodl 6y ago
The key to remember is it's not the same basket of household items - they provide for substitution. Apples are too expensive? Maybe they'll be replaced with grapes. Beef is too expensive? Maybe it'll get replaced by chicken. They substitute items in such a manner to keep the inflation index as low as possible. That's important because social security checks are adjusted based off that inflation index so they're motivated to keep it as low as possible. As you can imagine people claim this doesn't reflect true inflation as we're not necessarily comparing apples-to-apples (ha!) and it also excludes energy costs.
- jfengel 6y ago
  I don't see anything wrong with accounting for substitutions. If beef is too expensive this month, then people do switch to chicken. They haven't lost anything. It would be false if somehow this became an infinite treadmill where the basket went from beef to chicken to lentils to sawdust, but that's not what happens. The substition smooths out short term changes in price the same way people actually do. The economy acquires robustness through this redundancy, and the CPI measure reflects that. It's far from a perfect measure, but its failures aren't caused by the perfectly commonplace action of buying the cheapest goods today. Insisting that it has to be precisely the same goods would indeed be a distorted measure of the economy.