4 ms·

The official inflation numbers do not appear to reflect people's significant worries that rent prices or health care cost (etc.) keep going up.

23iofj 6y ago
In particular: education, insurance, and housing really is accurately reflected in the CPI, but the true price of non-shit consumer goods are consistently under-estimated in the CPI.
- adam_arthur 6y ago
  Housing is not included in CPI, only "rents". If home prices go up 10% this year, but interest rates drop such that the carrying cost is the same, the effect on CPI is net 0% inflation. Obviously the purchase price matters, because the higher prices are, the more money you need to even get in the door with homeownership.
  - 23iofj 6y ago
    > Housing is not included in CPI, only "rents". This reads like an oxymoron to anyone who's not a property owner, which is about half the country -- all of whom are in the bottom 90% referred to in the headline.
    - adam_arthur 6y ago
      Exactly. Inflation in home prices is great for property owners, bad for everybody else. Should renters not have the opportunity to buy a home?
      - chii 6y ago
        > Should renters not have the opportunity to buy a home? there should not be societal subsidies for people wanting to buy their home. If rents are not growing at a rate that's higher than wage growth, then it is stable and thus acceptable. Owning a home is a privilege, not a right. Thus, the CPI calculations correctly only includes rental costs, and not ownership.
        Rury 6y ago
        >If rents are not growing at a rate that's higher than wage growth, then it is stable and thus acceptable Nonsense. Theoretically if wages and rents grew 5% in step together yoy, but most other goods increased at >100% (say houses), your statement implies things would always remain stable. I'd think not... The real reason CPI is garbage (for measuring total inflation) is because it doesn't track everything, and hence misses the inflation in things that the CPI doesn't track (such as houses). More specifically, it's a measure that only tracks what urban people CAN & typically spend money on. It doesn't track the things which some people have been entirely priced out of and hence don't spend money on (such as home ownership, as well as other assets).
- cameldrv 6y ago
  Yes. When Apple comes out with a new iPhone, and last year's model is discounted by $100, that is counted as deflation in the CPI. When an appliance costs the same as it did 20 years ago, but lasts 5 years instead of 20 because it's made more cheaply, that's generally not factored in.
SpicyLemonZest 6y ago
They're meant to reflect the monetary phenomenon of inflation, not all worries about all prices. We need to address the rise of rent and healthcare prices, but dragging the prices down through monetary policy won't work if monetary policy isn't what's causing the problem.
SethMurphy 6y ago
Also, food is not included and is a significant portion of my perception of prices. Food prices went up significantly last year and it's not something you can decide not to buy. It may be pandemic influence, but that's the world we live in now. From USDA (source: https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings https://www.ers.usda.gov/data-products/food-price-outlook/su...): In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 3.4 percent. The CPI for all food increased 3.4 percent over this same period. In general, food price inflation in 2020 was much higher than in 2018 (0.4 percent), 2019 (0.9 percent), and the 20-year average (2.0 percent).
- throwaway2037 6y ago
  You wrote: "food is not included". The US Federal Reserve currently uses the personal consumption expenditures (PCE) price index. Read more here: https://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index https://en.wikipedia.org/wiki/Personal_consumption_expenditu... The PCE fraction for "food and beverages" (home, away, alcohol) ranges from 13.8% to 17.0%. That Wiki page also has a nice comparison to the consumer price index (CPI), which was previously used by the US Fed. US Social Security still uses CPI to adjust national pension payments. Also, you wrote that food prices had more inflation in 2020 compared to other recent years. During the COVID-19 pandemic, many people had cheaper transportation costs, which would offset some or all of this food price inflation.

23iofj 6y ago

In particular: education, insurance, and housing really is accurately reflected in the CPI, but the true price of non-shit consumer goods are consistently under-estimated in the CPI.

adam_arthur 6y ago
Housing is not included in CPI, only "rents". If home prices go up 10% this year, but interest rates drop such that the carrying cost is the same, the effect on CPI is net 0% inflation. Obviously the purchase price matters, because the higher prices are, the more money you need to even get in the door with homeownership.
- 23iofj 6y ago
  > Housing is not included in CPI, only "rents". This reads like an oxymoron to anyone who's not a property owner, which is about half the country -- all of whom are in the bottom 90% referred to in the headline.
  - adam_arthur 6y ago
    Exactly. Inflation in home prices is great for property owners, bad for everybody else. Should renters not have the opportunity to buy a home?
    - chii 6y ago
      > Should renters not have the opportunity to buy a home? there should not be societal subsidies for people wanting to buy their home. If rents are not growing at a rate that's higher than wage growth, then it is stable and thus acceptable. Owning a home is a privilege, not a right. Thus, the CPI calculations correctly only includes rental costs, and not ownership.
      - Rury 6y ago
        >If rents are not growing at a rate that's higher than wage growth, then it is stable and thus acceptable Nonsense. Theoretically if wages and rents grew 5% in step together yoy, but most other goods increased at >100% (say houses), your statement implies things would always remain stable. I'd think not... The real reason CPI is garbage (for measuring total inflation) is because it doesn't track everything, and hence misses the inflation in things that the CPI doesn't track (such as houses). More specifically, it's a measure that only tracks what urban people CAN & typically spend money on. It doesn't track the things which some people have been entirely priced out of and hence don't spend money on (such as home ownership, as well as other assets).
cameldrv 6y ago
Yes. When Apple comes out with a new iPhone, and last year's model is discounted by $100, that is counted as deflation in the CPI. When an appliance costs the same as it did 20 years ago, but lasts 5 years instead of 20 because it's made more cheaply, that's generally not factored in.

SpicyLemonZest 6y ago

They're meant to reflect the monetary phenomenon of inflation, not all worries about all prices. We need to address the rise of rent and healthcare prices, but dragging the prices down through monetary policy won't work if monetary policy isn't what's causing the problem.

SethMurphy 6y ago

Also, food is not included and is a significant portion of my perception of prices. Food prices went up significantly last year and it's not something you can decide not to buy. It may be pandemic influence, but that's the world we live in now. From USDA (source: https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings https://www.ers.usda.gov/data-products/food-price-outlook/su...): In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 3.4 percent. The CPI for all food increased 3.4 percent over this same period. In general, food price inflation in 2020 was much higher than in 2018 (0.4 percent), 2019 (0.9 percent), and the 20-year average (2.0 percent).

throwaway2037 6y ago
You wrote: "food is not included". The US Federal Reserve currently uses the personal consumption expenditures (PCE) price index. Read more here: https://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index https://en.wikipedia.org/wiki/Personal_consumption_expenditu... The PCE fraction for "food and beverages" (home, away, alcohol) ranges from 13.8% to 17.0%. That Wiki page also has a nice comparison to the consumer price index (CPI), which was previously used by the US Fed. US Social Security still uses CPI to adjust national pension payments. Also, you wrote that food prices had more inflation in 2020 compared to other recent years. During the COVID-19 pandemic, many people had cheaper transportation costs, which would offset some or all of this food price inflation.