US consumers remain unimpressed with this progress, however, because they remember what they were paying for things pre-pandemic. Used car prices are 34% higher, food prices are 26% higher and rent prices are 22% higher than in January 2020, according to our calculations using PCE data.
While these are some of the more extreme examples of recent price increases, the average basket of goods and services that most Americans buy in any given month is 17% more expensive than four years ago.
There is a disconnect between the statistics and reality. I am not sure where, but I suspect inflation is not being calculated correctly. It may be that lower cost items rose at a higher rate, so even though it averages out, it’s harder to reduce spending. 17% doesn’t seem to match the numbers I’ve seen for take out and home prices for example.
At the end of the day, it doesn’t matter what’s on a chart it matters how many things people had to choose to not buy or do because they couldn’t afford it.
Didn’t they just adjust the whole inflation index again to not count a bunch of significant things? It’s a joke.
Same with unemployment. It only counts “able individuals who are actively searching for a job”. A lot of people aren’t included in those numbers when they should be.
The inflation index is and has always been a metric for the rich.
The reason that most of the excluded things are not goods or services the wealthy use is so that those companies can profit more from the already economically burdened all while shaming those same burdened people by saying 'You can’t be struggling, inflation has ONLY been 6%!
Sure for yachts and luxury cars the prices have barely changed but generic meat and fresh vegetables have literally doubled in price in 4 years while the high end offerings have gone up less than 20%.
I’m not sure if that’s actually true, but I’d note that for certain luxury goods, weird things happen with prices. You can wind up in a situation where higher prices make a good more-desirable because it’s more-exclusive, more of a status symbol.
https://en.wikipedia.org/wiki/Veblen_good
For luxuries like that, the price can be largely decoupled from the cost of production, and can instead be linked to ability to pay. Like, if the reason you’re buying something is to show off that you can afford to pay the price, the cost of manufacture may not be what sets the price, even in a competitive market.
That being said, that’s not all that common. It probably doesn’t apply to whole classes of goods, but rather specific things like a brand (since if there’s interest in the thing other than as a status symbol, competitors can produce a cheaper thing and find buyers). And the reason that it can be decoupled from the cost of production is only because the price is well above the cost of production.
CPI does not include yachts in its calculation
Food goes up 20%, Consumer electronics go down 20% and they’ll call it zero inflation. Not an exact example but an illustration of why things dont feel right. The things you have to buy most often are rising faster than the luxuries. Education, Healthcare, Housing it’s a similar story there.
Correction: Food goes up 20%, housing prices go up 80%, Consumer electronics go down 20% and they’ll call it negative inflation. The things most important to people and their biological survival are intentionally not part of the CPI so, they get ignored in most inflation reports.
EDIT: To be clear, the CPI tracks “in-place” or active rent paid by tenants plus utilities (and subsidies, where applicable). It does not track current asking prices or purchase price as it considers purchasing a home to be an investment. This means that it is a very poor way of measuring the housing situation.
Rent/housing is like a third of CPI, it’s already being taken into account. Remember, CPI already talked into account these numbers, including higher food costs. But it also takes into account that energy costs did not increase as quickly. Even if some things went up 30%, if other things go up 10% the average can’t possibly be 30%
Also consumer spending is very strong in America right now, so even if some people can’t afford things, other people are way outspending them
The CPI only takes rental prices into account, not home purchases or rental values. Additionally, it only captures active rentals, not asking prices, meaning that it has significant lag and is a poor indicator for trends in rental prices.
This is true, but the average person is paying a mortgage or rent, not moving every single month so the current rental price is the most relevant to people’s expenses