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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

#71

Post by throw0101a »

lettergram wrote: post #15
shmatt wrote: 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…

> 1. There are things like “shrink-flation” not captured.

Poppycock. From StatCan, who do the CPI numbers in Canada:

> 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time.

* https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019...

> 2. Fuel is only down because the US has used its strategic reserve to increase supply.

Fuel is down in Canada as well, which has no strategic reserve. Or it could be because geopolitical events have stabilized a bit and global oil prices are down:

* https://fred.stlouisfed.org/series/DCOILWTICO

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

#72

Post by jollyllama »

UncleMeat wrote: post #62
jollyllama wrote: post #27

Earlier quoted context omitted.

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.

That's just more cherry picking. The appropriate thing to do is to create a collection of food items that represent some sort of average of the population expenses and measure that. And when they do this, they compute that food-at-home rose 0.2% in December (2.4% annualized).

Two thirds of adults in the US are overweight or obese. You don't want to eat the average basket of goods they're eating.

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

#73

Post by UncleMeat »

vondur wrote: post #54
shmatt wrote: 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

Ha. Our natural gas bills in my area doubled this month.

No fun for you, but nationwide piped gas went up 3%, not 100%.

Your cost per unit (not overall gas bill) doubled in december? What gas provider do you have?

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

#74

Post by ceejayoz »

jollyllama wrote: post #70
ceejayoz wrote: post #64

Earlier quoted context omitted.

Yes, some individuals will see higher than average inflation in their basket. Others will see lower than average. That's why we work with the averages for policy decisions rather than looking for individual anecdotes. If I subsist entirely off the cocktail shrimp at my local Wegmans and have no other expenses, my inflation value is something like 500%. Is that a particularly useful number for the Fed? No.

Cocktail shrimp sounds extravagant; that's not what we're talking about. GP is on point. We're talking about basic staples, the real food you find on the edges of the grocery store, not the highly processed items in the middle.

You've misread my comment. The cocktail shrimp example is why "nuh uh, my personal number is higher" is not a valuable data point. Maybe you go to an expensive store, maybe you buy the fancier lettuce, maybe your basket includes some things you consider staples that aren't all that common nationally.

It's why we have a nation-wide check on the prices of a well-researched selection of staples in the average proportions they make up in an average person's budget, rather than polling random people on the Internet for anecdotes. That number is far more useful.

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

#75

Post by ceejayoz »

lettergram wrote: post #67
NikolaNovak wrote: post #49

Earlier quoted context omitted.

This is a key point and massive misunderstanding in everybody I know : there's this expectation that when "inflation slows down", then "prices will return to normal". But that's empathically not what it means. If prices rose whatever percent last 18 months, and inflation drops to zero tomorrow... Prices will stay exactly the same. They just won't increase further day to day any more (at zero inflation). "Inflation is…

The real struggle is the government - fed, treasury, etc all claimed the inflation was “transitory”. A lot of people have been caught off guard. Aka people expected a deflation. I was pointing out most of the increase the last 3 years occurred in 2021. I actually believe 2022 has far higher inflation than they claim in government figures. At least locally, it’s higher based on my tracking. 2023 will be worse for food…

> fed, treasury, etc all claimed the inflation was “transitory”

That is precisely what "Core measure rose 0.3% in December" means. The period of high inflation is (apparently) over. The price increases that inflation generated will tend to stick around.

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

#76

Post by jollyllama »

lotsofpulp wrote: post #40
jollyllama wrote: post #37

Earlier quoted context omitted.

Do you happen to know why in November it was difficult to find lettuce?

https://www.agalert.com/california-ag-news/archives/november... https://www.sfgate.com/food/article/salinas-crop-disease-aff... https://www.ksbw.com/article/pathogens-destroying-salinas-va...

Interesting. At what point do we conclude we have systemic issues with our agriculture?

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

#77

Post by markus_zhang »

pwinnski wrote: post #58
markus_zhang wrote: post #41

Earlier quoted context omitted.

It's meaningless because every individual follows his or her own life. For example, getting a new house might increase your rent while the "average" rent drops. What I'm trying to say is, unless for investment or research, these data doesn't have much to do with we as individuals. You can see people arguing that "You all feel X goes up but I don't feel that", and I'm just saying the same thing but from a different pe…

Mostly people arguing that the numbers are "wrong" are misunderstanding what low inflation means. Low inflation means prices won't continue to rise. It does not mean that prices will come down. The prices you remember from two years ago, they're gone. They're not even considered when calculating inflation numbers now.

True, but price fluctuations are still "individual" things, when we consider the cost. The CPI is at best a very vague/inaccurate number for personal financial planning. Looking at one's bills are far more useful.

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

#78

Post by markus_zhang »

UncleMeat wrote: post #69
markus_zhang wrote: post #31

To me the data is more or less meaningless. I keep a notebook of my own inflation record for food and fuel.

Sure, CPI data won't be accurate for a single person. But we also probably shouldn't base monetary policy off of your personal spending.

Yeah, that's why I don't think we should use individual cases when discussing CPI, as shown by many comments here. Instead let's focus on macroeconomic discussion.

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

#79

Post by dragonwriter »

lettergram wrote: post #67
NikolaNovak wrote: post #49

Earlier quoted context omitted.

This is a key point and massive misunderstanding in everybody I know : there's this expectation that when "inflation slows down", then "prices will return to normal". But that's empathically not what it means. If prices rose whatever percent last 18 months, and inflation drops to zero tomorrow... Prices will stay exactly the same. They just won't increase further day to day any more (at zero inflation). "Inflation is…

The real struggle is the government - fed, treasury, etc all claimed the inflation was “transitory”. A lot of people have been caught off guard. Aka people expected a deflation. I was pointing out most of the increase the last 3 years occurred in 2021. I actually believe 2022 has far higher inflation than they claim in government figures. At least locally, it’s higher based on my tracking. 2023 will be worse for food…

> The real struggle is the government - fed, treasury, etc all claimed the inflation was “transitory”. A lot of people have been caught off guard. Aka people expected a deflation.

The prediction that inflation spike was transitory (which was universally abandoned anyway) was not a prediction of a rapid return to past prices, but of a rapid return without significant policy intervention to normal rates of inflation.

> At least locally, it’s higher based on my tracking.

Local inflation tends to differ from the national average one way or the other, and I doubt your tracking is anywhere close tonas comprehensive and systematic as any of the major federal government inflation measures.

OTOH, the PCE—which is what the Fed uses to guide police decisions—during the spike has jumped higher than the CPI and came down slower, so “the CPI has understated recent inflation” is part of the premise of recent monetary policy.

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