6 ms·

> That is completely normal, though. If not using basics like food, fuel, and pricing on rent or mortgage - what are we basing the numbers off of? If it's the

> That is completely normal, though. If not using basics like food, fuel, and pricing on rent or mortgage - what are we basing the numbers off of? If it's the stable price of a Spotify subscription, rather than real goods needed to survive, something is horribly off.

toxik 4y ago
That is exactly what inflation is computed from. Like literally.
- gambiting 4y ago
  Then how can it be only 9%? My gas price has increased by 200% in the last few months. In August, my electricity is going up 400%. Petrol alone has gone up by about 50% compared to few months back. Sure bread is still roughly the same as it was. But living costs have absolutely exploded recently, and far far beyond the 9% indicated.
  - rwmj 4y ago
    You can calculate your personal inflation rate although you need to start by tracking your expenditures: https://monevator.com/personal-inflation-rate/ https://monevator.com/personal-inflation-rate/
  - nerdponx 4y ago
    Because headline inflation is not equivalent to "% change in cost of living", and the media should stop reporting it as such.
  - gruez 4y ago
    >My gas price has increased by 200% in the last few months That seems... unlikely. https://www.globalpetrolprices.com/United-Kingdom/gasoline_prices/ https://www.globalpetrolprices.com/United-Kingdom/gasoline_p... At best it doubled, but that's not the same as "increased by 200%", which implies it tripled.
    - gambiting 4y ago
      I was paying 3p/kWh of gas, now I'm paying 9p/kWh. Also I understand the confusion, but "gas" in UK means heating gas, gasoline is called petrol.
  - fleddr 4y ago
    If you have relatively stable expenses, you can calculate your own inflation just by comparing year to year. Historically for me real inflation is the formal EU number + 2%. So that means that they're usually about a 100% off as inflation has been low for a long time, until now.
- nerdponx 4y ago
  The point that you are either dismissing or missing is that headline inflation tends to include products that have extremely sticky prices, and tends to exclude products with prices that fluctuate freely. Therefore, headline inflation tends to be a poor proxy for change in cost of living, and is at best a lagging indicator.
- Grimburger 4y ago
  I can agree with this but basket substitution is the dirty little secret of economists. If the cost of meat goes up so much that everyone starts eating dog food, the inflation print will barely rise at all. It's not a real measure for QoL which I hope most people would accept as being what societies actually strive for. In fact most measures like GDP and a few others have no real bearing on increased living standards. GDP per capita should be the only real number when talking about economic growth for starters. Even then catastrophes like natural disasters and war bump up those numbers due to rebuilding so it's still quite a rough metric to report on each year.
  - em500 4y ago
    It's not much of a secret when even in high school economics class I was taught about different substitution methods (Paasche, Laspeyres[1]) with various drawbacks. It's done because factually consumers buy different and producers produce different things over the years, and it's hard to impossible to observe/measure which substitutions are by necessity and which by preference. [1] https://en.wikipedia.org/wiki/Price_index#Paasche_and_Laspeyres_price_indices https://en.wikipedia.org/wiki/Price_index#Paasche_and_Laspey...
    - Grimburger 4y ago
      The average person in society doesn't have the knowledge of a high school economics student though. Even those that learnt eventually forget it. There's always an implicit older == smarter bias in society but I doubt many people who passed with good grades in high school economics are good at the basic concepts into their 30's. Not to mention the MMT experiments that have been undertaken in the west over the last few years. I'm not even sure MMT proponents understand the consequences of such things. There's been a lot of resource misallocation that no one seems able to take responsibility for. GDP, inflation, interest rates, etc are oft considered the main KPI's for politicians by the people who vote for them. It's a dismal science even for those well versed in its ways.
      - em500 4y ago
        I mostly agree (except for the weird MMT stuff). OTOH, I believe governments and schools at least in my country have made a good faith effort to try to educate kids widely about these matters. But most kids and adults alike probably find textbook economics and statistics as appealing as unsweetened oatmeal, and strongly prefer to consume sensationalized headlines and conspiracy theories. There's some tension between free choice and paternalistically nudging/forcing the population towards healthier stuff, that I wouldn't know how to resolve.
em500 4y ago
The basket and weights for UK CPI are here: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2022 https://www.ons.gov.uk/economy/inflationandpriceindices/arti... and for the US: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm The weights are based on estimates of how consumers actually spend on different goods and services, rather than on how much someone would need to spend for subsistence or survival.

toxik 4y ago

That is exactly what inflation is computed from. Like literally.

gambiting 4y ago
Then how can it be only 9%? My gas price has increased by 200% in the last few months. In August, my electricity is going up 400%. Petrol alone has gone up by about 50% compared to few months back. Sure bread is still roughly the same as it was. But living costs have absolutely exploded recently, and far far beyond the 9% indicated.
- rwmj 4y ago
  You can calculate your personal inflation rate although you need to start by tracking your expenditures: https://monevator.com/personal-inflation-rate/ https://monevator.com/personal-inflation-rate/
- nerdponx 4y ago
  Because headline inflation is not equivalent to "% change in cost of living", and the media should stop reporting it as such.
- gruez 4y ago
  >My gas price has increased by 200% in the last few months That seems... unlikely. https://www.globalpetrolprices.com/United-Kingdom/gasoline_prices/ https://www.globalpetrolprices.com/United-Kingdom/gasoline_p... At best it doubled, but that's not the same as "increased by 200%", which implies it tripled.
  - gambiting 4y ago
    I was paying 3p/kWh of gas, now I'm paying 9p/kWh. Also I understand the confusion, but "gas" in UK means heating gas, gasoline is called petrol.
- fleddr 4y ago
  If you have relatively stable expenses, you can calculate your own inflation just by comparing year to year. Historically for me real inflation is the formal EU number + 2%. So that means that they're usually about a 100% off as inflation has been low for a long time, until now.
nerdponx 4y ago
The point that you are either dismissing or missing is that headline inflation tends to include products that have extremely sticky prices, and tends to exclude products with prices that fluctuate freely. Therefore, headline inflation tends to be a poor proxy for change in cost of living, and is at best a lagging indicator.
Grimburger 4y ago
I can agree with this but basket substitution is the dirty little secret of economists. If the cost of meat goes up so much that everyone starts eating dog food, the inflation print will barely rise at all. It's not a real measure for QoL which I hope most people would accept as being what societies actually strive for. In fact most measures like GDP and a few others have no real bearing on increased living standards. GDP per capita should be the only real number when talking about economic growth for starters. Even then catastrophes like natural disasters and war bump up those numbers due to rebuilding so it's still quite a rough metric to report on each year.
- em500 4y ago
  It's not much of a secret when even in high school economics class I was taught about different substitution methods (Paasche, Laspeyres[1]) with various drawbacks. It's done because factually consumers buy different and producers produce different things over the years, and it's hard to impossible to observe/measure which substitutions are by necessity and which by preference. [1] https://en.wikipedia.org/wiki/Price_index#Paasche_and_Laspeyres_price_indices https://en.wikipedia.org/wiki/Price_index#Paasche_and_Laspey...
  - Grimburger 4y ago
    The average person in society doesn't have the knowledge of a high school economics student though. Even those that learnt eventually forget it. There's always an implicit older == smarter bias in society but I doubt many people who passed with good grades in high school economics are good at the basic concepts into their 30's. Not to mention the MMT experiments that have been undertaken in the west over the last few years. I'm not even sure MMT proponents understand the consequences of such things. There's been a lot of resource misallocation that no one seems able to take responsibility for. GDP, inflation, interest rates, etc are oft considered the main KPI's for politicians by the people who vote for them. It's a dismal science even for those well versed in its ways.
    - em500 4y ago
      I mostly agree (except for the weird MMT stuff). OTOH, I believe governments and schools at least in my country have made a good faith effort to try to educate kids widely about these matters. But most kids and adults alike probably find textbook economics and statistics as appealing as unsweetened oatmeal, and strongly prefer to consume sensationalized headlines and conspiracy theories. There's some tension between free choice and paternalistically nudging/forcing the population towards healthier stuff, that I wouldn't know how to resolve.

em500 4y ago

The basket and weights for UK CPI are here: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2022 https://www.ons.gov.uk/economy/inflationandpriceindices/arti... and for the US: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm The weights are based on estimates of how consumers actually spend on different goods and services, rather than on how much someone would need to spend for subsistence or survival.