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U.S. annual inflation rate drops to 8.5%

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Re: U.S. annual inflation rate drops to 8.5%

#131

Good news I guess. But my electricity price literally doubled. My house insurance is up 30%. My gas bill is up by a lot. Have you seen the price of oreos? The $5 box at Taco Bell is my splurge and I'm trying to cut back on everything I can.

The inflation on food due to high fuel and fertilizer prices won’t really kick in until October -> February during harvest.

Next year food will be far higher, largely due to

- people skipping fertilizer a second year in a row

- the feed price increases from year prior will impact next years meat

- much of the cow herds have been reduced due to hay prices skyrocketing (but beef rates staying far lower, due to sell offs)

- if Ukraine doesn’t surrender, we can expect less food production and potential oil disruption to center Europe

- Russia is not likely to renew trade relationships baring a reparations for seizing assets. They produce much of the fertilizer and oil

- 10% reduction in nitrogen targets for EU countries and Canada will further reduce food production

Yeah, a drop here or there isn’t indicative of a major change in inflation. I don’t see how we can get lower general inflation in the next 3+ years. FED has said as much.

In way of an explanation, hay prices have tripled. It’s expected they’ll at least double again tin the next 12 months. That’s one of the feed for cattle. That’s a 6x expected increase to feed cattle (the largest expense). To put it in perspective, that’s likely going to mean $12-20/lb ground beef; $25-$30/lb steak in 18 months.

Re: U.S. annual inflation rate drops to 8.5%

#133

So the year over year CPI increase each month this year (starting from January) was 7.5%, 7.9%, 8.5%, 8.3%, 8.6%, 9.1%, 8.5%. So this value has been jumping around a bit as it has been going up. This drop is being taken as good news -- but I worry whether this is really a meaningful drop or whether we are just over interpreting what could be a fundamentally noisy metric?

Is it really a noisy metric? I think not. It's just that this year has been very tumultuous from a supply side. I would wager these are fairly precise measurements of real effects (ignoring the basket of goods issue). I'm not an expert.

Re: U.S. annual inflation rate drops to 8.5%

#134

These inflation numbers, as I assume other flagged posts have already pointed out, are extremely misleading. Does anyone really think that housing, food, gas, or any other major consumer expense has only risen 8.5% since a year ago?

CPI is like GDP

CPI collects certain things some people have decided represent the economy as experienced by ordinary people. How well it works in general and for your experience in particular depends on the choice of items in the basket and how well they match your reality.

edit: There's a Planet Money series on GDP. I wouldn't be surprised to see a follow-up on CPI soon.

Re: U.S. annual inflation rate drops to 8.5%

#135

Whats the goal? At what inflation rate will the Fed be happy with?

2%. Getting off 9% is not hard. Getting below 4% is where we will see what they need to do to hammer it down.

I suspect that everyone (Fed, consumers, government) will be relatively content to float around at 4% YoY CPI for the medium-term now that the "inflation overton window" (if you will) has shifted so much.

I can't imagine that policymakers are going to make precisely zeroing in on 2% their first priority given the current market anxiety... but that's ultimately a bridge that will have to be crossed when we collectively get there.

Re: U.S. annual inflation rate drops to 8.5%

#137

Good news I guess. But my electricity price literally doubled. My house insurance is up 30%. My gas bill is up by a lot. Have you seen the price of oreos? The $5 box at Taco Bell is my splurge and I'm trying to cut back on everything I can.

>But my electricity price literally doubled. What supplier and location, out of curiosity?

Similar in Florida with FPL(the utility company) [0]. We are now paying more. These are the new rates [1].

[0] https://cleanenergy.org/blog/fpls-holiday-surprise-810-milli...

[1] https://www.fpl.com/content/dam/fplgp/us/en/rates/pdf/res-ju...

Re: U.S. annual inflation rate drops to 8.5%

#138
post #48

Earlier quoted context omitted.

Quoted post unavailable.

stock is not 100% correlated with earnings/profiteering https://corporate.mcdonalds.com/corpmcd/en-us/our-stories/ar... plenty of numbers down from 2021 including margins

Sure but companies are also still reporting record profits in many cases right now so it's clearly not just input costs driving up prices.

Re: U.S. annual inflation rate drops to 8.5%

#139

Good. Now we can look forward to interest rate cuts to deal with the recession...

You can't grow infinitely forever. Eventually, you'll never be able to hit the target and it will distort things in really weird ways. Just look at the machinations Jinping Xi has had to pull off just to keep China going.

They have had positive GDP growth above 5% since roughly 1990.

Re: U.S. annual inflation rate drops to 8.5%

#140

So the year over year CPI increase each month this year (starting from January) was 7.5%, 7.9%, 8.5%, 8.3%, 8.6%, 9.1%, 8.5%. So this value has been jumping around a bit as it has been going up. This drop is being taken as good news -- but I worry whether this is really a meaningful drop or whether we are just over interpreting what could be a fundamentally noisy metric?

Is it really a noisy metric? I think not. It's just that this year has been very tumultuous from a supply side. I would wager these are fairly precise measurements of real effects (ignoring the basket of goods issue). I'm not an expert.

Almost by definition any "year over year" metric that is taken monthly will be at least somewhat noisy.

And if you think about it, reducing "inflation" to a single number will always disguise some things - gas prices adjust multiple times a day if necessary but things like leases only get renegotiated once a year or even longer.

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