9 ms·

It seems like this inflation is not broad-based: “In the quarter to August used cars, hotel rooms and airfares made up less than 5% of America’s consumer-price

It seems like this inflation is not broad-based: “In the quarter to August used cars, hotel rooms and airfares made up less than 5% of America’s consumer-price index, but together accounted for the majority of overall inflation” If we’re having inflation due to a tiny number of goods having large price spikes, it might be too early to predict disaster https://www.economist.com/graphic-detail/2021/11/06/a-handful-of-items-are-driving-inflation-in-america https://www.economist.com/graphic-detail/2021/11/06/a-handfu...

roody15 5y ago
Food prices are up. https://finance.yahoo.com/news/consumer-price-index-shows-food-144607233.html https://finance.yahoo.com/news/consumer-price-index-shows-fo...
strict9 5y ago
This is a great point. But a counterpoint is that housing is not included in consumer price index. Real estate prices have rocketed to outer space for the past year and housing constitutes the biggest monthly expense for most people. Not predicting disaster, but what's going on is very unusual and no one can predict how or when it will shake out.
- donkeyd 5y ago
  > Real estate prices have rocketed to outer space for the past year In the Netherlands it's about 20% YoY. And this is starting to become true all throughout the country even though it started in urban areas. I really feel bad for people who aren't homeowners yet, because becoming one right now is getting damn near impossible.
  - kipchak 5y ago
    I fall into that category, and am still mildly hopeful there might be one or two more chances to hop on board. My rent increased by close to 20% this year (US, FL) to the point where paying my old rent with a $250 month to month penalty is actually cheaper. I think this is part of the rampant speculation on crypto and the like - $1,000 isn't really going to do me that much good, but if I hit a 100x I could be a homeowner.
    - lotsofpulp 5y ago
      > My rent increased by close to 20% this year (US, FL) to the point where paying my old rent with a $250 month to month penalty is actually cheaper. I have never heard of this type of rental agreement. Your contract says you can stay indefinitely if you pay $250 per month extra over the expired contract’s rent?
      - kipchak 5y ago
        The lease automatically converted to a month to month after the one year term ended. This thread seems to cover a similar scenario.[1] I suppose the downside is they could give me the boot with 30 days notice. FWIW I've contacted them several times to try and just sign a lease but the property has been bought out and had it's management office staff swapped out a few times so the whole thing is a mess. [1]https://www.city-data.com/forum/renting/1261828-fixed-term-lease-converted-month-month.html https://www.city-data.com/forum/renting/1261828-fixed-term-l...
  - 01100011 5y ago
    I don't know how the 'average joe' is tolerating it right now. I rent, but I also work in tech so there's still a chance I'll be able to buy a house one day(not anywhere near my job, but still). If I were middle class and saving for a home, I think I would be angry to the point of revolution and violence right now. There are people who have worked like crazy their whole lives and they just had their hopes and dreams set on fire by runaway money creation and the resulting inflation.
    - vkou 5y ago
      > There are people who have worked like crazy their whole lives and they just had their hopes and dreams set on fire by runaway money creation and the resulting inflation. Would they be happier under a repeat of 2008 or 1928 instead?
      - kipchak 5y ago
        I would figure from a self interested perspective a repeat of 2008 would be pretty advantageous to an aspiring homeowner. Home prices peaked at $262,600 median in March 2007 and bottomed at $205,100 in March of 2009.[1] Rates were even about a % lower in 2009.[2][3] Of course if the hypothetical aspiring homeowner with excellent market timing lost their job the point would be moot, but if their income stayed the same and they put 20,000 down their monthly payments would have gone from $1,302 to $994. [1]http://www.fedprimerate.com/new_home_sales_price_history.htm http://www.fedprimerate.com/new_home_sales_price_history.htm [2]https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Reports-Mortgage-Interest-Rates-March-2009.aspx https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Reports-... [3]https://www.marketwatch.com/story/us-mortgage-rates-hit-2007-lows https://www.marketwatch.com/story/us-mortgage-rates-hit-2007...
        vkou 5y ago
        Is it pretty advantageous to new retiree who has followed orthodox investment advice, and has started to live off their investments, only to see the value of half of them crash? Even if they recover in six years, they have still lost a mountain of principal in the meantime. Is it advantageous to a new graduate who will see no work, and maybe a decade of depressed wages (which, between loans and compounding interest in savings, is devastating to their future prospects)? Is it advantageous to a new homeowner that just lost their job? Some people got burnt by that flood of money that stabilized the economy. Some people benefited. Some people avoided harm. Focusing on the first group without regard for the latter is missing a large part of the picture - which was that the economy as a whole remained more or less stable through this crisis.
- _delirium 5y ago
  CPI does include housing, weighted at 32% in the CPI-U [1]. [1] https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf, Table 1
  - adam_arthur 5y ago
    And the CPI figure is severely lagging public rent data https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data OER is a hugely flawed metric that is somewhat designed to suppress true cost increases. E.g. they include rent controlled units in the figure. Small portion, but clearly that's not a useful lens to analyze through. Many other methodological flaws that can be enumerated
    - _delirium 5y ago
      If I'm reading apartmentlist's methodology correctly, they're tracking average prices for apartments that were vacant and have newly been rented (what they call "transacted rent prices"). But they don't track prices for existing leases to long-term tenants, which are typically much more stable than newly turned over units. Depending on the market, that can significantly overestimate rent increases in the broader market. For example, in NYC, about 50% of renters are in rent-controlled units, but they account for a relatively small percentage of new listings, because the units don't turn over often. So you'd get different answers if you average rent for newly turned over units vs. average rent for all current tenants. (I'm not in NYC, but also in that category: I've rented my place for years, and my rent has increased 0.0% this year.)
      - adam_arthur 5y ago
        Yes, exactly. Why would you ever want to weight in rent controlled units? The much more useful number is, what is the cost of living for somebody plopped into the economy. Because eventually almost everybody ends up moving and bearing that cost. Should our price data be forward looking or backwards looking? Obviously from a policy perspective having forward looking pricing data is much more useful and relevant. Including rent controlled units and existing leases is a methodological flaw of OER. You're right though, if you game the measurement and design the methodology just right, you can produce lower numbers. If the CPI formula were unchanged from the 70s, we would have roughly equivalent inflation numbers now that we had then.
- xapata 5y ago
  CPI doesn't include the stock market, either. Real estate is an asset. Rent is included, however. They estimate how much a home owner is effectively paying in rent.
deleted 5y ago
[deleted]
- whydoibother 5y ago
  Ah yes mr crypto says hyperinflation is coming. I believe that.
angelzen 5y ago
Housing sticks out like a sore thumb. 2% increase? Over what period? Case Schiller is double since the last dip (circa 2012), and a solid 45% up since the peak of the 2008 bubble. It has a sharp uptick in the past couple of years, sharper than the 2006 run up. Sure, 2% housing inflation, nothing to see here. https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
- dragonwriter 5y ago
  > Case Schiller ...measures home ownership (asset) prices, CPI housing measures housing consumption (rent or imputed rent) prices.
epistasis 5y ago
Agreed, so far this looks like it's a bull-whip effect in many many supply chains. For example, lumber is still priced fairly high, but far far down from its peak level. And if this podcast is to be believed (and I think it is), mere lack of metal trusses for home building is holding back a lot of builders from continuing with their projects, meaning a ton of lumber is being held in places that it's not usually held, which will lead to further bull whip price swings: https://www.bloomberg.com/news/articles/2021-11-08/stinson-dean-on-the-lumber-crash-that-followed-the-boom https://www.bloomberg.com/news/articles/2021-11-08/stinson-d...
- lumost 5y ago
  Counter point: Inflation due to large monetary stimulus may appear through a bullwhip affect as demand eventually stresses fixed-capacity capital intensive industries. Once these industries are strained higher costs may radiate outwards.
  - wbsss4412 5y ago
    It’s probably a little of a, a little of b. It is still less of a school to the economy than the beginning of the pandemic was. Threading the needle to manage this period has to be extremely difficult for policy makers.
  - dls2016 5y ago
    Isn’t this what we’re seeing? Semiconductors strained leading to rising auto prices? (For example.) What evidence is there that it will radiate outwards at a rate significantly above the Fed’s target for an extended period of time?
    - 01100011 5y ago
      Evidence? This is economics we're talking about. I think we can make some guesses, but the system is too complex to make reliable predictions. A single advancement in worker automation could easily provide enough productivity gains to offset wage growth. A single plant disease or new political treaty could massively effect food and or energy costs. The system is chaotic.
luciusdomitius 5y ago
This is nice talk, but have you really not bought groceries, electronics, filled up your tank or paid an electrcity/natgas bill in the past 6 months?
- minitoar 5y ago
  I’m not sure that’s a compelling counter argument. Those are simply other supply chains also experiencing bull whips.
  - colordrops 5y ago
    What non-supply chain expenses would need to inflate to qualify this as broad-based inflation then?
    - missedthecue 5y ago
      Seems like the narrative is that inflation isn't happening, and it if is happening, it's transitory, and if it's not transitory, it's irrelevant
      - gruez 5y ago
        >and if it's not transitory, it's irrelevant who's claiming that?
  - luciusdomitius 5y ago
    Well, I believe it is. The original argument was that it is a very large price increase of small number of not that widely consumed goods causing the numbers to look that bad. Housing, transportation, energy and food are the majority of expenditure for most people, which is in a direct contradiction of what OP claims.
  - zdragnar 5y ago
    I don't think the cost of propane nearly doubling is bull whip, not out here. Therr are going to be a lot of people wearing extra layers and looking at getting wood stoves out here this winter.
01100011 5y ago
I don't know, but I think if you want to see where inflation is headed you should look at labor costs. Unless we see a corresponding increase in productivity(maybe from automation), I think prices will have to rise to compensate. Lots of things can transiently spike in price, like energy or raw materials, and you can eat those increases by taking less profits if you don't have the pricing power, but once labor costs go up it seems you are stuck with them. If those labor costs drive the price of goods and services beyond some psychological tipping point, you then have more demands for higher wages, at least until those start to get rejected and we find a new zone of relative pricing stability. I'm not arguing for hyperinflation or anything, but I don't think we'll see the price increases of the last year go away. If you're like me and had your assets in cash, well, a good percentage of that buying power is gone and not coming back.
jcoq 5y ago
One thing I've seen repeated is that increased shelter costs are problematic if rents rise (on locked in leases) because wage expectations would rise in response.
mc32 5y ago
I don't know, last year my oil change was around forty bucks, this year it's been closer to a hundred. I think we're just seeing the tip of the spear and the shaft is going to show up pretty soon, though I hope you are right and we don't get the shaft.
- hourislate 5y ago
  That's just it, the guy on the skateboard who pays a buck more a day for his Chipotle and SBUX isn't going to notice shit. The guy who feeds his family of 4 (vehicle, cloths, energy, taxes, life) is feeling it.
- alphabettsy 5y ago
  How is your oil change more expensive? Oil itself doesn't seem to be more expensive so is it the labor in your case?
  - mc32 5y ago
    I’m not an operator. All I am is a run of the mill automobile owner who needs the car serviced. The prices have gone up why the shops upped the price is not something I’m privvy to. On the other hand fuel prices are up considerably too.
    - alphabettsy 5y ago
      I'm just curious because oil changes do not appear to be more expensive because of supplies. Oil and oil filters cost the same as they did before. Is it possible you just got ripped off?
      - mc32 5y ago
        That's the price for full synthetic 6 qts. If you like search Groupon for their non-discount prices. Sometimes you can get a 40% discount at the shop near you, but not always. I don't always have the time to drive to the place with a discount.
adam_arthur 5y ago
Public market rent data shows rents up ~17% YTD, while CPI shows ~3%. https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data There's a huge lag to reflect certain data in the headline numbers. Owners equivalent rent measurement technique, only sampling 1/6 of housing stock per month and so on lead to about a 12 month lag in cpi. Rents alone will fuel high baseline inflation for at least a year or two, once the value starts getting priced in. You are right that we'll likely see some decline from cars normalizing, but not enough to offset rents and more broad based pressures. Baseline inflation will likely remain well above the Feds 2% target
- rory 5y ago
  Average market rent represents a segment of rent prices that responds much more quickly to market price shocks than rent prices as a whole. Your link is effectively the price change for people moving into a new apartment. The other 50-60% of the market (people renewing their lease or continuing tenancy at will) has much smoother price growth over time. Doesn't square 17% and 3%, but it could definitely mean the lagging CPI rent growth we see over the coming year is more like 9 or 10%.
  - adam_arthur 5y ago
    The market rate forecasts the rent increases for the broader market. If market rate of new units is 20% higher, almost by definition you'll see 20% higher rents for all in the long run. Why should we use backward looking methodology in computing the CPI? It's an extremely flawed way to analyze the state of the market. Forward looking metrics are more useful to policy makers. The methodology for OER and rent analysis in the CPI acts to suppress true price increases. Though those price increases eventually materialize as people renew their leases, move etc. It comes with a year or longer lag though. The Fed drives their policy based on this data. Why should the data have a one year lag and potentially put them behind the curve? If we used the same CPI formula as in the 70s, we would be seeing similar CPI numbers too.
    - rory 5y ago
rattlesnakedave 5y ago
>If we’re having inflation due to a tiny number of goods having large price spikes I take issue with this. Hotel rooms and airfare can often be forgone for the average American. New (or used) cars to a lesser extent. However we are seeing increases in prices of ag commodities increasing dramatically. On a year-on-year basis, prices were up 32.8% in September[1]. Oil prices are at a three year high[2]. Not to mention soaring housing costs. It may indeed be to early to predict disaster, but things are not as good as your comment seems to suggest. [1] https://www.reuters.com/business/world-food-prices-hit-10-year-peak-fao-2021-10-07/ https://www.reuters.com/business/world-food-prices-hit-10-ye... [2] https://www.reuters.com/business/energy/oil-prices-rise-tight-supply-set-weekly-gain-more-than-2-2021-10-15/ https://www.reuters.com/business/energy/oil-prices-rise-tigh...
- quickthrowman 5y ago
  Food costs more because freight costs went up.
ChrisLomont 5y ago
This article points out the CPI increased, not simply some rare items. This increase reflects exactly the basket of goods people buy.
comeonseriously 5y ago
Groceries and gas are up. This is devastating for those who think $50 left over at the end of the month is a good month.
- tarsinge 5y ago
  But fortunately they can buy smartphones with better specs than before for the same price so they’ll be good /s
- epistasis 5y ago
  I would think that increase in rent, which are typically far higher percentages of income, would have a far bigger effect.
belter 5y ago
All items seem to be contributing to it. Exception are Medical Services. Probably because this latest item is already so expensive anyway... https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm

roody15 5y ago

Food prices are up. https://finance.yahoo.com/news/consumer-price-index-shows-food-144607233.html https://finance.yahoo.com/news/consumer-price-index-shows-fo...

strict9 5y ago

This is a great point. But a counterpoint is that housing is not included in consumer price index. Real estate prices have rocketed to outer space for the past year and housing constitutes the biggest monthly expense for most people. Not predicting disaster, but what's going on is very unusual and no one can predict how or when it will shake out.

donkeyd 5y ago
> Real estate prices have rocketed to outer space for the past year In the Netherlands it's about 20% YoY. And this is starting to become true all throughout the country even though it started in urban areas. I really feel bad for people who aren't homeowners yet, because becoming one right now is getting damn near impossible.
- kipchak 5y ago
  I fall into that category, and am still mildly hopeful there might be one or two more chances to hop on board. My rent increased by close to 20% this year (US, FL) to the point where paying my old rent with a $250 month to month penalty is actually cheaper. I think this is part of the rampant speculation on crypto and the like - $1,000 isn't really going to do me that much good, but if I hit a 100x I could be a homeowner.
  - lotsofpulp 5y ago
    > My rent increased by close to 20% this year (US, FL) to the point where paying my old rent with a $250 month to month penalty is actually cheaper. I have never heard of this type of rental agreement. Your contract says you can stay indefinitely if you pay $250 per month extra over the expired contract’s rent?
    - kipchak 5y ago
      The lease automatically converted to a month to month after the one year term ended. This thread seems to cover a similar scenario.[1] I suppose the downside is they could give me the boot with 30 days notice. FWIW I've contacted them several times to try and just sign a lease but the property has been bought out and had it's management office staff swapped out a few times so the whole thing is a mess. [1]https://www.city-data.com/forum/renting/1261828-fixed-term-lease-converted-month-month.html https://www.city-data.com/forum/renting/1261828-fixed-term-l...
- 01100011 5y ago
  I don't know how the 'average joe' is tolerating it right now. I rent, but I also work in tech so there's still a chance I'll be able to buy a house one day(not anywhere near my job, but still). If I were middle class and saving for a home, I think I would be angry to the point of revolution and violence right now. There are people who have worked like crazy their whole lives and they just had their hopes and dreams set on fire by runaway money creation and the resulting inflation.
  - vkou 5y ago
    > There are people who have worked like crazy their whole lives and they just had their hopes and dreams set on fire by runaway money creation and the resulting inflation. Would they be happier under a repeat of 2008 or 1928 instead?
    - kipchak 5y ago
      I would figure from a self interested perspective a repeat of 2008 would be pretty advantageous to an aspiring homeowner. Home prices peaked at $262,600 median in March 2007 and bottomed at $205,100 in March of 2009.[1] Rates were even about a % lower in 2009.[2][3] Of course if the hypothetical aspiring homeowner with excellent market timing lost their job the point would be moot, but if their income stayed the same and they put 20,000 down their monthly payments would have gone from $1,302 to $994. [1]http://www.fedprimerate.com/new_home_sales_price_history.htm http://www.fedprimerate.com/new_home_sales_price_history.htm [2]https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Reports-Mortgage-Interest-Rates-March-2009.aspx https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Reports-... [3]https://www.marketwatch.com/story/us-mortgage-rates-hit-2007-lows https://www.marketwatch.com/story/us-mortgage-rates-hit-2007...
      - vkou 5y ago
        Is it pretty advantageous to new retiree who has followed orthodox investment advice, and has started to live off their investments, only to see the value of half of them crash? Even if they recover in six years, they have still lost a mountain of principal in the meantime. Is it advantageous to a new graduate who will see no work, and maybe a decade of depressed wages (which, between loans and compounding interest in savings, is devastating to their future prospects)? Is it advantageous to a new homeowner that just lost their job? Some people got burnt by that flood of money that stabilized the economy. Some people benefited. Some people avoided harm. Focusing on the first group without regard for the latter is missing a large part of the picture - which was that the economy as a whole remained more or less stable through this crisis.
_delirium 5y ago
CPI does include housing, weighted at 32% in the CPI-U [1]. [1] https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf, Table 1
- adam_arthur 5y ago
  And the CPI figure is severely lagging public rent data https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data OER is a hugely flawed metric that is somewhat designed to suppress true cost increases. E.g. they include rent controlled units in the figure. Small portion, but clearly that's not a useful lens to analyze through. Many other methodological flaws that can be enumerated
  - _delirium 5y ago
    If I'm reading apartmentlist's methodology correctly, they're tracking average prices for apartments that were vacant and have newly been rented (what they call "transacted rent prices"). But they don't track prices for existing leases to long-term tenants, which are typically much more stable than newly turned over units. Depending on the market, that can significantly overestimate rent increases in the broader market. For example, in NYC, about 50% of renters are in rent-controlled units, but they account for a relatively small percentage of new listings, because the units don't turn over often. So you'd get different answers if you average rent for newly turned over units vs. average rent for all current tenants. (I'm not in NYC, but also in that category: I've rented my place for years, and my rent has increased 0.0% this year.)
    - adam_arthur 5y ago
      Yes, exactly. Why would you ever want to weight in rent controlled units? The much more useful number is, what is the cost of living for somebody plopped into the economy. Because eventually almost everybody ends up moving and bearing that cost. Should our price data be forward looking or backwards looking? Obviously from a policy perspective having forward looking pricing data is much more useful and relevant. Including rent controlled units and existing leases is a methodological flaw of OER. You're right though, if you game the measurement and design the methodology just right, you can produce lower numbers. If the CPI formula were unchanged from the 70s, we would have roughly equivalent inflation numbers now that we had then.
xapata 5y ago
CPI doesn't include the stock market, either. Real estate is an asset. Rent is included, however. They estimate how much a home owner is effectively paying in rent.

deleted 5y ago

[deleted]

whydoibother 5y ago
Ah yes mr crypto says hyperinflation is coming. I believe that.

angelzen 5y ago

Housing sticks out like a sore thumb. 2% increase? Over what period? Case Schiller is double since the last dip (circa 2012), and a solid 45% up since the peak of the 2008 bubble. It has a sharp uptick in the past couple of years, sharper than the 2006 run up. Sure, 2% housing inflation, nothing to see here. https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA

dragonwriter 5y ago
> Case Schiller ...measures home ownership (asset) prices, CPI housing measures housing consumption (rent or imputed rent) prices.

epistasis 5y ago

Agreed, so far this looks like it's a bull-whip effect in many many supply chains. For example, lumber is still priced fairly high, but far far down from its peak level. And if this podcast is to be believed (and I think it is), mere lack of metal trusses for home building is holding back a lot of builders from continuing with their projects, meaning a ton of lumber is being held in places that it's not usually held, which will lead to further bull whip price swings: https://www.bloomberg.com/news/articles/2021-11-08/stinson-dean-on-the-lumber-crash-that-followed-the-boom https://www.bloomberg.com/news/articles/2021-11-08/stinson-d...

lumost 5y ago
Counter point: Inflation due to large monetary stimulus may appear through a bullwhip affect as demand eventually stresses fixed-capacity capital intensive industries. Once these industries are strained higher costs may radiate outwards.
- wbsss4412 5y ago
  It’s probably a little of a, a little of b. It is still less of a school to the economy than the beginning of the pandemic was. Threading the needle to manage this period has to be extremely difficult for policy makers.
- dls2016 5y ago
  Isn’t this what we’re seeing? Semiconductors strained leading to rising auto prices? (For example.) What evidence is there that it will radiate outwards at a rate significantly above the Fed’s target for an extended period of time?
  - 01100011 5y ago
    Evidence? This is economics we're talking about. I think we can make some guesses, but the system is too complex to make reliable predictions. A single advancement in worker automation could easily provide enough productivity gains to offset wage growth. A single plant disease or new political treaty could massively effect food and or energy costs. The system is chaotic.

luciusdomitius 5y ago

This is nice talk, but have you really not bought groceries, electronics, filled up your tank or paid an electrcity/natgas bill in the past 6 months?

minitoar 5y ago
I’m not sure that’s a compelling counter argument. Those are simply other supply chains also experiencing bull whips.
- colordrops 5y ago
  What non-supply chain expenses would need to inflate to qualify this as broad-based inflation then?
  - missedthecue 5y ago
    Seems like the narrative is that inflation isn't happening, and it if is happening, it's transitory, and if it's not transitory, it's irrelevant
    - gruez 5y ago
      >and if it's not transitory, it's irrelevant who's claiming that?
- luciusdomitius 5y ago
  Well, I believe it is. The original argument was that it is a very large price increase of small number of not that widely consumed goods causing the numbers to look that bad. Housing, transportation, energy and food are the majority of expenditure for most people, which is in a direct contradiction of what OP claims.
- zdragnar 5y ago
  I don't think the cost of propane nearly doubling is bull whip, not out here. Therr are going to be a lot of people wearing extra layers and looking at getting wood stoves out here this winter.

01100011 5y ago

I don't know, but I think if you want to see where inflation is headed you should look at labor costs. Unless we see a corresponding increase in productivity(maybe from automation), I think prices will have to rise to compensate. Lots of things can transiently spike in price, like energy or raw materials, and you can eat those increases by taking less profits if you don't have the pricing power, but once labor costs go up it seems you are stuck with them. If those labor costs drive the price of goods and services beyond some psychological tipping point, you then have more demands for higher wages, at least until those start to get rejected and we find a new zone of relative pricing stability. I'm not arguing for hyperinflation or anything, but I don't think we'll see the price increases of the last year go away. If you're like me and had your assets in cash, well, a good percentage of that buying power is gone and not coming back.

jcoq 5y ago

One thing I've seen repeated is that increased shelter costs are problematic if rents rise (on locked in leases) because wage expectations would rise in response.

mc32 5y ago

I don't know, last year my oil change was around forty bucks, this year it's been closer to a hundred. I think we're just seeing the tip of the spear and the shaft is going to show up pretty soon, though I hope you are right and we don't get the shaft.

hourislate 5y ago
That's just it, the guy on the skateboard who pays a buck more a day for his Chipotle and SBUX isn't going to notice shit. The guy who feeds his family of 4 (vehicle, cloths, energy, taxes, life) is feeling it.
alphabettsy 5y ago
How is your oil change more expensive? Oil itself doesn't seem to be more expensive so is it the labor in your case?
- mc32 5y ago
  I’m not an operator. All I am is a run of the mill automobile owner who needs the car serviced. The prices have gone up why the shops upped the price is not something I’m privvy to. On the other hand fuel prices are up considerably too.
  - alphabettsy 5y ago
    I'm just curious because oil changes do not appear to be more expensive because of supplies. Oil and oil filters cost the same as they did before. Is it possible you just got ripped off?
    - mc32 5y ago
      That's the price for full synthetic 6 qts. If you like search Groupon for their non-discount prices. Sometimes you can get a 40% discount at the shop near you, but not always. I don't always have the time to drive to the place with a discount.

adam_arthur 5y ago

Public market rent data shows rents up ~17% YTD, while CPI shows ~3%. https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data There's a huge lag to reflect certain data in the headline numbers. Owners equivalent rent measurement technique, only sampling 1/6 of housing stock per month and so on lead to about a 12 month lag in cpi. Rents alone will fuel high baseline inflation for at least a year or two, once the value starts getting priced in. You are right that we'll likely see some decline from cars normalizing, but not enough to offset rents and more broad based pressures. Baseline inflation will likely remain well above the Feds 2% target

rory 5y ago
Average market rent represents a segment of rent prices that responds much more quickly to market price shocks than rent prices as a whole. Your link is effectively the price change for people moving into a new apartment. The other 50-60% of the market (people renewing their lease or continuing tenancy at will) has much smoother price growth over time. Doesn't square 17% and 3%, but it could definitely mean the lagging CPI rent growth we see over the coming year is more like 9 or 10%.
- adam_arthur 5y ago
  The market rate forecasts the rent increases for the broader market. If market rate of new units is 20% higher, almost by definition you'll see 20% higher rents for all in the long run. Why should we use backward looking methodology in computing the CPI? It's an extremely flawed way to analyze the state of the market. Forward looking metrics are more useful to policy makers. The methodology for OER and rent analysis in the CPI acts to suppress true price increases. Though those price increases eventually materialize as people renew their leases, move etc. It comes with a year or longer lag though. The Fed drives their policy based on this data. Why should the data have a one year lag and potentially put them behind the curve? If we used the same CPI formula as in the 70s, we would be seeing similar CPI numbers too.
  - rory 5y ago

rattlesnakedave 5y ago

>If we’re having inflation due to a tiny number of goods having large price spikes I take issue with this. Hotel rooms and airfare can often be forgone for the average American. New (or used) cars to a lesser extent. However we are seeing increases in prices of ag commodities increasing dramatically. On a year-on-year basis, prices were up 32.8% in September[1]. Oil prices are at a three year high[2]. Not to mention soaring housing costs. It may indeed be to early to predict disaster, but things are not as good as your comment seems to suggest. [1] https://www.reuters.com/business/world-food-prices-hit-10-year-peak-fao-2021-10-07/ https://www.reuters.com/business/world-food-prices-hit-10-ye... [2] https://www.reuters.com/business/energy/oil-prices-rise-tight-supply-set-weekly-gain-more-than-2-2021-10-15/ https://www.reuters.com/business/energy/oil-prices-rise-tigh...

quickthrowman 5y ago
Food costs more because freight costs went up.

ChrisLomont 5y ago

This article points out the CPI increased, not simply some rare items. This increase reflects exactly the basket of goods people buy.

comeonseriously 5y ago

Groceries and gas are up. This is devastating for those who think $50 left over at the end of the month is a good month.

tarsinge 5y ago
But fortunately they can buy smartphones with better specs than before for the same price so they’ll be good /s
epistasis 5y ago
I would think that increase in rent, which are typically far higher percentages of income, would have a far bigger effect.

belter 5y ago

All items seem to be contributing to it. Exception are Medical Services. Probably because this latest item is already so expensive anyway... https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm