10 ms·
Inflation Appears to Be Over
- hncensorship69 3y agoUm...inflation is still over 3%. That's using bogus government computed CPI. Well in excess of the 2% target. Since the fed moved to an average inflation target, shouldn't the fed be targeting sub-2%?
- object-a 3y agoThe article is reporting that wholesale prices (measured by the PPI) have declined 0.5% Y/Y. It might take a while to affect CPI, but that would strongly suggest that inflation has reached a turning point.
- uoaei 3y agoWholesale prices are not consumer prices.
- object-a 3y agoNo, but they affect consumer prices.
- uoaei 3y agoOnly in the sense that they set a floor, but not that they set a ceiling. Thus, very limited utility in the context of understanding consumer prices.
- object-a 3y agoIt's true, but a large gap between consumer and producer prices is hard to maintain over the long run. It is true that there are other factors which can drive inflation and rising consumer prices. However, if the recent bout of inflation was caused by supply chain issues, or by food + energy costs rising, then a decline in producer prices would probably slow consumer price inflation.
- uoaei 3y ago[flagged]
- object-a 3y agoIt is not "simping" to point out that factor prices have an impact on consumer prices. And while some companies do have (too much) pricing power, I wouldn't categorize it as unilateral and unchecked
- dang 3y ago> your motivation to simp Crossing into personal attack, as you did here, will get your account banned—especially when the account has a long history of breaking the site guidelines. We've had to ask you about this many times: https://news.ycombinator.com/item?id=36748588 https://news.ycombinator.com/item?id=36748588 (July 2023) https://news.ycombinator.com/item?id=36748560 https://news.ycombinator.com/item?id=36748560 (July 2023) https://news.ycombinator.com/item?id=28611505 https://news.ycombinator.com/item?id=28611505 (Sept 2021) https://news.ycombinator.com/item?id=23648230 https://news.ycombinator.com/item?id=23648230 (June 2020) https://news.ycombinator.com/item?id=22263907 https://news.ycombinator.com/item?id=22263907 (Feb 2020) I don't want to ban you! But we really need you to stick to the rules, so if you'd please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and do that from now on, that would be good.
- hncensorship69 3y agoPerhaps. A turning point is not the same as "over" though.
- object-a 3y agoInflation will probably never be "over", since stable inflation is generally positive for growth and employment. The Fed's target isn't for 0%, its around 2% y/y
- tea-coffee 3y agoI believe CPI is unchanged in October. I did not take a close look at the CPI numbers, but I believe the steady index is in part due to energy falling. But rents and food are increased. Not an economist, so I'm not sure how much to read into that.
- object-a 3y agoPPI is a leading indicator for CPI, since it represents what producers are paying. A falling PPI would (probably) indicate lower CPI inflation in future releases.
- dragonwriter 3y ago> PPI is a leading indicator for CPI, since it represents what producers are paying. A falling PPI would (probably) indicate lower CPI inflation in future releases. PPI and CPI historically are loosely correlated, but show no clear lead-follow relationship. PPI seems to swing harder, but not first. https://www.fisherinvestments.com/en-us/insights/market-commentary/charts-of-the-day-ppi-doesnt-lead-cpi https://www.fisherinvestments.com/en-us/insights/market-comm...
- dragonwriter 3y agoNo, it wouldn't, because PPI rate of change isn't a leading indicator of CPI rate of change, and, anyhow, PPI inflation has recently been unusually elevated compared to CPI inflation, so if it indicates anything (doubtful) its a more normal relationship between CPI inflation and PPI inflation, not what direction CPI inflation is heading.
- object-a 3y agoCPI includes a lot of stuff that's not in PPI (including shelter and rent), so it would depend on what the components or drivers of inflation are in the CPI. If owner equivalent rent is moving lower (which it was in October), and if prior inflation was caused by supply chain tightness or higher input costs, than a lower PPI could indicate that supply chain tightness has eased, and goods inflation will head lower or stabilize. It's also worth noting that CPI moves slower than PPI because rents make a pretty big percentage of CPI, and rents move slower than PPI due to how the BLS measures them. It is _a_ leading indicator, but not the _sole_ leading indicator.
- dragonwriter 3y agoThat's all nice abstract theory about why PPI should, in a particular model of how the world might work, be a leading indicator of CPI, but we have a history of CPI and PPI data and the fact is, PPI isn't a leading indicator of CPI. They tend to be correlated, but not in a lead-follow relationship.
- object-a 3y agoI will grant that the PPI and CPI are not in a clear lead-follow relationship, for composition reasons that I mentioned above and that are covered in the article you posted. However, the PPI can still be a leading indicator of the direction that consumer prices are moving. Here's a recent article from the Federal Reserve on this question: > However, we also see a considerable positive correlation between lagged values of monthly PPI inflation and the current month's inflation. In particular, the correlations between current monthly PCE inflation and previous months' PPI inflation up to seven months back are all greater than 0.3. This is our first clue that PPI inflation contains information for future changes in the PCE price index. https://www.richmondfed.org/publications/research/economic_brief/2022/eb_22-38 https://www.richmondfed.org/publications/research/economic_b...
- xnx 3y agoI still hold that a huge part of the frustration with price changes over the past four years is people hearing news about inflation and thinking it means prices. Inflation has returned to normal levels, but I don't think most economists expect prices to broadly decrease. Decreasing prices can be a (very) bad thing.
- smeeth 3y agoA little deflation can be fine, good even. Inflation oscillated around 0 for most of American history and our economy did great. Most gut aversion to deflation comes from great depression PTSD.
- alexb_ 3y agoOur economy did great, except for the: - Panic of 1785 - Copper Panic of 1789 - Panic of 1792 - Panic of 1796–1797 - 1802–1804 recession - Depression of 1807 - 1812 recession - 1815–1821 depression - 1822–1823 recession - 1825–1826 recession - 1828–1829 recession - 1833–1834 recession - 1836–1838 recession - 1839–1843 recession - 1847–1848 recession - 1853–1854 recession - Panic of 1857 - 1860–1861 recession - 1865–1867 recession - Panic of 1873 (which lasted until 1879) - Depression of 1882–1885 - 1887–1888 recession - 1890–1891 recession - Panic of 1893 - Panic of 1896 - 1899–1900 recession - 1902–1904 recession - Panic of 1907 - Panic of 1910–1911 - Recession of 1913–1914 But besides that we did fine.
- hncensorship69 3y ago1. Many of those economic events were due to many factors, deflation not being one of them 2. Nearly all of them were relatively minor and recovered on their own 3. Now make a list of all the economic disasters that have happened under fiat money / central bank / pro-inflation policies. Ideally the economy oscillates between periods of low inflation and low deflation. This would reflect natural business cycles.
- dragonwriter 3y ago
- throwitaway222 3y agoThe groceries I'm buying now for $4.79 now were $2.49 in 2019. Roughly 90% overall inflation rate for everything I buy since 2019. That being said I decided not to change my habits and preferences - but it's hurting to say the least.
- Dylan16807 3y agoWhat about all the things you buy that aren't groceries?
- Zandikar 3y agoLike all the other food, along with energy expenditures, and housing? Yeah those are all up too. Thankfully, those don't count either. TV's are cheap though!
- Dylan16807 3y agoI'm not asking if they are up, I'm asking if they are up 90%.
- Zandikar 3y agoThe context of the post you're referring to contextualized "Everything" as related to the subject of groceries. Trying to move the goalposts to "but he said everything" and ignoring the context of his comment is not productive discourse. What are you trying to get at?
- Dylan16807 3y ago> The context of the post you're referring to contextualized "Everything" as related to the subject of groceries. I did not interpret it that way. I interpreted that as trying to imply a breadth of cost increase that was not true, so I was trying to call that out. If we interpret it that way, then I might not have replied, this comment does a better job: https://news.ycombinator.com/item?id=38281712 https://news.ycombinator.com/item?id=38281712 But I might have pointed out that "groceries" is a pretty narrow view on inflation.
- gazelle21 3y ago[dead]
- it 3y agoWell sure, because inflation comes from loans, and with high interest rates people are less inclined to take out loans.
- macinjosh 3y agoThe damage is here to stay though. Prices stopped going up but they did not go back to where they were.
- lambdasquirrel 3y agoWell there you have it, folks. The political people have said inflation is over, therefore it must be over.
- ruined 3y agoi'm looking for a new apartment at the moment, and i'm noticing that prices seem to actually be in decline. vacancies are staying open, property managers are anxiously calling me for follow-up if they don't hear back, and generally have a less dismissive attitude than before i'm not sure if it's just this city (i've moved recently) or if it's something broader
- roflyear 3y agoCommercial RE is a real buyer's market.
- stuckinhell 3y agoLike hell it is, my groceries doubled in price from the orange man era. Eggs in my neighborhood went from $2-5 to now $5-10 dollars. Inflation is only over if you manipulate the stats, the average person is absolutely reeling. Tiktok is full of videos of people asking how they are coping. Mommy net is the exact same, with people asking for diaper donations at a pace I've never seen before. I've been blessed to work in tech, so I've been donating a couple hundred bucks of diapers!
- alexb_ 3y agoThe average price of eggs hit a high of $4.83. Eggs were extremely expensive for a very short period of time, but have gone down to normal levels. https://fred.stlouisfed.org/series/APU0000708111 https://fred.stlouisfed.org/series/APU0000708111 Trying to guess economic sentiment from TikTok is not a good idea.
- stuckinhell 3y agoThe plural of anecdote is data. Tiktok is just one of many social media sites where people are venting about inflation.
- alexb_ 3y agoThe plural of anecdote says prices are not increasing at the rate they once were.
- stuckinhell 3y agoDo you not understand my subpoint on how the "economy" isn't being connected back to daily life of the average american citizen, and when we do connect it back we can easily see how the numbers are being manipulated ? You are extremely out of touch. The real world has confounding variables beyond the ones captured in your wrong model.
- yoav 3y agoInflation isn’t prices. It’s rate of change of prices.
- norwalkbear 3y agoOnly when you manipulated the stats heavily. The average person is hit hard. at happy hour in the city, tons of white collar workers are bitching about two things inflation and layoffs
- readthenotes1 3y agoNot credible. The BLS changed how it measures things so of course inflation went down https://www.bls.gov/cpi/additional-resources/improvements-cpi-health-insurance-index.htm https://www.bls.gov/cpi/additional-resources/improvements-cp...
- chrismcb 3y agoUnfortunately inflation will never be over. Some economist somewhere came up with the idea that people need to be encouraged to spend our invest their money. And you can do that by slowly making the cost of things go up, reducing the buying power of a dollar. Which forces you to spend it or save it, Rather than stick it under your mattress. But why? I think most people will want to invest their money. And a few will suck it under their mattress, but enough will want to invest it, to keep it circulating. We really need to stop forcing inflation