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U.S. inflation cools again, giving Fed room to downshift on rates

bloomberg.com

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Re: U.S. inflation cools again, giving Fed room to downshift on rates

#21
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

1. There are things like “shrink-flation” not captured. I’ve noticed most packaged goods have reduced in size 10-20%. Eggs have more than doubled, milk is up 25%, etc I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down. 2. Fuel is only down bec…

> There are things like “shrink-flation” not captured

I hear this everywhere, but as far as I can tell its a complete myth. The "basket of goods" that CPI is based on does keep track of changes in quality and quantity of the goods.

> If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a container of orange juice containing 59 ounces instead of 64 ounces) of the good or service since the last time prices were collected, the data collector selects a new item similar to the old item. This is referred to as a substitution.

> When substitution occurs, the commodity analyst reviews the new item and price. The new price may be quality adjusted for use in index computation. Conceptually, the CPI seeks to be a constant-quality measure, though accurately quantifying quality change may not always be possible. Detailed information about quality adjustment procedures is in the calculation section.

https://www.bls.gov/opub/hom/cpi/data.htm

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#22
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

1. There are things like “shrink-flation” not captured. I’ve noticed most packaged goods have reduced in size 10-20%. Eggs have more than doubled, milk is up 25%, etc I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down. 2. Fuel is only down bec…

> Though, to your point, much of the increase occurred in 2021 - it just never came down.

Yeah, the data is inflation going down (and not to negative values) year over year, not prices going down. Just means prices are inflating slower, not going negative.

And shrinkflation has been around for decades. It was a thing even when inflation was at 'normal' 2% levels.

Edgar Dworsky is the guy that all the media companies bring on as the expert on shrinkflation (just look up his name, pretty much all news sites have articles about him), has had his blog up pointing out all the instances of shrinkflation since as far back as 2006[1].

[1]: https://www.mouseprint.org/

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#23
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

1. There are things like “shrink-flation” not captured. I’ve noticed most packaged goods have reduced in size 10-20%. Eggs have more than doubled, milk is up 25%, etc I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down. 2. Fuel is only down bec…

> much of the increase occurred in 2021 - it just never came down.

That's not actually in disagreement with the notion that inflation has come down a lot.

(for prices to come down you'd need deflation)

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#24

not surprising. now that the covid related spike is far enough in the past I expect inflation to be down drastically since the throttle that was low rates is no longer being pressed on. question is, will the Fed stop raising rates soon enough?

> will the Fed stop raising rates soon enough? This is not a meaningful phrase.

Sure it is, raising rates, e.g. 0.25 this time, 0.50 this time, etc results in increased likelihood of a recession. This is why the rate has been slowing down (e.g. 0.75 last time to a likely 0.50 this time) in order to have a soft landing.

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#25
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

Get real. Have you bought eggs or butter lately? Random shoppers are literally exclaiming about the price of butter in the store.

How much of the average shopper's budget is eggs? If it's not that big a percentage then you're just not going to see it in the overall inflation rate, and you wouldn't expect to.

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#26

not surprising. now that the covid related spike is far enough in the past I expect inflation to be down drastically since the throttle that was low rates is no longer being pressed on. question is, will the Fed stop raising rates soon enough?

> will the Fed stop raising rates soon enough? This is not a meaningful phrase.

Why not? It's entirely possible to overcorrect. https://www.reuters.com/markets/us/feds-delayed-inflation-fi...

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#27

Earlier quoted context omitted.

Get real. Have you bought eggs or butter lately? Random shoppers are literally exclaiming about the price of butter in the store.

Sure, you can cherry-pick individual items to tell pretty much any story you like. If the 60% increase in butter prices over the last year is hitting your budget, you probably would benefit from eating less butter. (And I say this as someone who eats a good amount of butter...)

I'm not cherry picking. Produce is up massively. Heads of broccoli, lettuce, are up at least 20% over the last year! And that's IF you can find them.

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#28
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

1. There are things like “shrink-flation” not captured. I’ve noticed most packaged goods have reduced in size 10-20%. Eggs have more than doubled, milk is up 25%, etc I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down. 2. Fuel is only down bec…

RE 2: As far as I can tell the last strategic reserve sale occurred in mid-November with no sales in December / bids for repurchases being solicited. It's possible that the supply effects continued through December, but it seems a bit tenuous without economic modeling.

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#29

Earlier quoted context omitted.

> will the Fed stop raising rates soon enough? This is not a meaningful phrase.

Sure it is, raising rates, e.g. 0.25 this time, 0.50 this time, etc results in increased likelihood of a recession. This is why the rate has been slowing down (e.g. 0.75 last time to a likely 0.50 this time) in order to have a soft landing.

>>> will the Fed stop raising rates soon enough?

>> This is not a meaningful phrase

> Sure it is,

No, it is not. You meant some sort of recession, as if thats an undesired massive financial correction. This has been a long time coming and is better in the long run if the correction happens sooner than later. Good luck with whatever.

Re: U.S. inflation cools again, giving Fed room to downshift on rates

#30
post #6

Earlier quoted context omitted.

* Food at home +0.2%, smallest since March 2021 * Fuel oil -16.6%, biggest decline since February 1990 Seems important to point out to anyone reading your comment

Get real. Have you bought eggs or butter lately? Random shoppers are literally exclaiming about the price of butter in the store.

If the only thing you eat is eggs, then you're a weird edge-case not accounted for in the standard inflation figures, of course.
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