5 ms·

Is inflation really 8 % though? Real number is probably closer to 20 %.

• tootie 4y ago
  No. There is no "real" number. 8% is the indicator we use. When it hits 8% we know it's higher than when it's at 3%. You can't ever take that number and extrapolate what things are actually going to cost you day to day. Some things are way more than 8%. Some prices are going down.
• randomdata 4y ago
  Yes, most likely. By the definition in use, unquestionably. Cost of living feels like it is up 20% (albeit location dependent), which may be what you are thinking of, but inflation and cost of living are decidedly not the same thing.
  • rightbyte 4y ago
    Inflation seems really spotty to me. Like, dunno, some brands got very expansive while some not. Some restaurants raise prices alot while others lag. It is strange.
    • tootie 4y ago
      That is 100% normal. Inflation isn't a magic force that is applied evenly to the economy. It is an emergent property characterized by decreased purchasing power of money. There is a misconception that inflation is caused by a policy or by some other hidden force. It is actually caused by the same laws of supply and demand that govern every other economic calculation. Right now, demand for almost everything (including labor) is very high and supply is very low. Conversely, the supply of money is high. So prices and wages all go up. Currently at different speeds. Energy and food supplies are being pinched by the war in Ukraine which is causing them to inflate faster than other products. Supply chains are affecting imported goods in a lot of places more than domestically produced. Things like food and energy are largely "inelastic" which means that demand can't go down even when price goes up. You can slow down your purchases of new phones or shoes or other stuff, but you can't eat less or stop heating your house. Things where demand is more elastic, you may just see people buy less in response to high prices until it hits equilibrium.
  • thephyber 4y ago
    Location-dependent variance is normal. IIRC, CPI inflation metrics do tricky things with rents versus mortgages, so cost of living can appear very different for renters versus homeowners, even in the same neighborhood.
• JackFr 4y ago
  What do you mean by 'real number'? CPI is well defined and has a clear construction, as does PPI and GDP deflator. The 'real number' is something people seem to bring up as a signal that the beaurocrats an politicians are lying to us, but it is not well defined or defined at all, so it's impossible to disagree with.
• thephyber 4y ago
  Inflation as measured by CPI or Core CPI are objective measures. You are comparing that against a subjective measure but pretending like it is objective. There are reasonable arguments to make that CPI is insufficient for measuring everything that we spend on (it underweights healthcare, gas, college costs, and lots of luxury investments like stocks and artwork). There are also reasonable arguments that cost of living in some regions is growing faster than 8% (the actual CPI number obviously isn’t homogeneous across the entire country). Also important to note that there is no “intrinsic value” in dollar terms for any good. Everything is a negotiation of how much we want a thing. If you insist on Quaker Oats oatmeal instead of generic oatmeal (a personal preference), you might experience a higher rate of inflation than others who are more amenable to substitutes.