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If you say inflation of consumer staples matters, while inflation of assets does not matter, you are accepting a two tier economy between consumers and asset ho
by jackcosgrove 6y ago
If you say inflation of consumer staples matters, while inflation of assets does not matter, you are accepting a two tier economy between consumers and asset holders. Stock ownership has become more available recently because of technology, but the more important asset class to most people is housing. That's because housing is also shelter, and by inflating part of the market for shelter - owner-occupied dwellings - beyond the reach of many you increase demand for rentable shelter. I don't think this distinction between two kinds of inflation is helpful, especially when one is considered bad and the other benign.
- harryh 6y agoCPI takes into account the cost of shelter. https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
- lottin 6y agoShelter is a "service" whose consumption we call rent. Rent therefore qualifies as consumption expenditure and is included in the CPI. Owning a home doesn't make any difference, you still pay rent to the owner (which in this case is yourself). The distinction between inflation and asset price "inflation" is important because they are not the same thing. Inflation is an increase in the price level, whereas an increase in the price of some assets is that.