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Estonia clocks fastest inflation in the Eurozone at 20.1 percent

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Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#131

Post by nerdponx »

toxik wrote: post #67
yuropeen wrote: post #52

Earlier quoted context omitted.

> 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.

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

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.

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#132

Post by macinjosh »

yodsanklai wrote: post #36

I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations 1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral 2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything el…

We are experiencing both. During the pandemic governments inflated the money supply to fund vaccines, cash payouts to citizens, and huge programs to keep payrolls flowing. The pandemic also increased demand on consumer goods because people were spending their stimulus checks on goods since you couldn't go out or travel. Add on the fact that there are shortages of goods because many producers were slowed down significantly by lockdowns and staff shortages.

So we have both fewer goods available for purchase and less valuable money to buy them with.

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#133

Post by mnd999 »

mostly_harmless wrote: post #111
yodsanklai wrote: post #36

I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations 1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral 2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything el…

I think what's missing here is in case 1, it's not just the amount of money, but how much money is chasing each available good. You can imagine if the money supply doubles, a loaf of bread can be the same price as before if there are twice as many people demanding the same portion of bread (for a very crude approximation) Or to put it another way, maybe case 1 is demand-side inflation, and case 2 is supply-side infla…

If the money is doubled but most of it goes into offshore investment funds because those on the receiving end already have enough bread then the price of bread doesn’t really change, but venture cap funding becomes more readily available.

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#136

Post by forinti »

gruez wrote: post #125
forinti wrote: post #94

Earlier quoted context omitted.

You are right, and some central banks only use the basic interest rate as a remedy in all cases. It seems to me that case 2 cannot be solved through this mechanism. My feeling is that most media is close to financial markets and gets corralled into its point of view.

>You are right, and some central banks only use the basic interest rate as a remedy in all cases. It seems to me that case 2 cannot be solved through this mechanism. It can. Interest rates rise -> money becomes more expensive -> investment dries up -> demand is quenched -> things become cheap again

It seems to me that the medicine is worse than the disease in this case.

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#137

Post by heavenlyblue »

rawbot wrote: post #35

Doesnt' every country calculate their inflation separately? Because living in Germany, that 7% is laughable. Nothing has risen by that little of an amount. Not food, rent, petrol, etc. Well, I do know of something that has risen to less than 7%: salaries.

Bummer: all prices are included in the calculation, including salaries, so if products have increased 14% and salaries increased 0% then given that markets are relatively same, inflation is only 7%. From the perspective of a consumer though…

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#138

Post by nerdponx »

gambiting wrote: post #105
toxik wrote: post #67

Earlier quoted context omitted.

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

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.

Because headline inflation is not equivalent to "% change in cost of living", and the media should stop reporting it as such.

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#139

Post by nathias »

yodsanklai wrote: post #36

I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations 1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral 2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything el…

There is monetary supply inflation (increase in quantity of money), which WOULD be neutral if you would do an airdrop to everyone in economy in the same proportions and this would then be the same as price inflation, but that kind of inflation would be useless. What is going on is the goverment prints money, gives it to the largest economic actors, to 'stimulate the economy' and then it 'trickles down' and we get increased volatility of prices which usually means a bigger increase in more necessary consumer goods (food, housing).

Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent

#140

Post by aeyes »

piva00 wrote: post #61
rawbot wrote: post #35

Doesnt' every country calculate their inflation separately? Because living in Germany, that 7% is laughable. Nothing has risen by that little of an amount. Not food, rent, petrol, etc. Well, I do know of something that has risen to less than 7%: salaries.

When I look at the Swedish numbers I feel the same and then I see that prices went down for "photography, audiovisual and computer equipment" and... Nothing else. Fuel is up 40+%, food by 8-10%, housing by 2%, electricity by 30+%. How the fuck do we end up with a normalised rate of inflation of 6-7%?? I do need to do proper research on the models because just using my common sense it doesn't make any fucking sense...

Because the inflation indicator is calculated with a typical spending basket, it has several components which are slower to adjust prices. In CPI for example housing is 25% and then you have things like education, healthcare and insurance.

Also inflation numbers are usually reported comparing the difference in the last 12 months, you are probably thinking about the pre-pandemic prices so you'll have to add them up.

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