Real inflation at 8%?

posted at 11:00 am on March 1, 2012 by Ed Morrissey

Ben Bernanke claims not to worry over the inflationary impact of rising gas prices.  In testimony to the House Financial Services Committee yesterday, the Fed chair said that gas price hikes would temporarily bump inflation upward and reduce disposable income, but that the impact would not be lasting, nor deflect from the long-term trend of stable inflation rates:

Federal Reserve Chairman Ben Bernanke downplayed the long-term consequences of high gasoline prices on Wednesday, while urging lawmakers to establish a careful plan to restore the country’s fiscal sustainability. …

The economy will likely see short-term inflation from higher gasoline prices, which could reduce consumers’ purchasing power, Bernanke said, but maintained that the Fed still expected to see inflation remain subdued in the longer term.

How subdued is inflation?  The current official estimate has the annualized inflation rate at 3.1%.  However, CBS reports that a different measure of inflation puts the rate much higher:

Forget the modest 3.1 percent rise in the Consumer Price Index, the government’s widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.

The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don’t look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans’ typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.

The institute contends that to get a good read on inflation’s “sticker shock” effect, you must look at the cost of goods that the average household buys at least once a month and factor in only the kinds of expenses that are subject to change. That, too, eliminates the cost of housing because when you finance your home with a fixed-rate mortgage, that expense remains constant until you refinance or move. …

Over the past year, the EPI is up just over 8 percent, according to the economics group. The biggest factor: Motor fuel and transportation costs are up 21.06 percent from year-ago levels. The cost of food, prescription drugs, and tobacco also have increased faster than the government’s inflation measure, rising 3.56 percent, 4.21 percent, and 3.4 percent, respectively.

The analysis at AIER appears robust and scholarly.  They note that the CPI and their EPI (Everyday Price Index) remained closely correlative until the bubble expansion in the mid-2000s.  The peak of the disconnect hit in 2008, but the two have been significantly unlinked since.  On a year-by-year basis, this chart shows the contrast:

Normally, changing measures means adopting a new metric with little history. In this case, though, AEIR shows that the reliance on relatively rare big-ticket purchases in the CPI does not reflect the actual impact on consumers.  The EPI reflects more accurately the consistent experience of consumers in the marketplace, where escalating fuel costs raise prices on goods across most distribution channels, especially at the grocery store.

The US government will not be adopting the EPI any time soon, of course.  The Obama administration should be paying close attention to it, though.  Consumers who see their buying power rapidly eroding will not respond to claims of having mastered an economic recovery — a dynamic we have already seen, even before higher gas prices have begun to have a big impact.


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About the only things I buy these days are gas and food. Can’t afford anything else.

rbj on March 1, 2012 at 11:03 AM

I’d be surprised inf inflation wasn’t near 10%. I f*#@ing hate the democrat party.

tom daschle concerned on March 1, 2012 at 11:03 AM

Just wait until we get some velocity on that money that the Fed has been working day and night to print over the last few years.

besser tot als rot on March 1, 2012 at 11:03 AM

The sad part is this kind of information does not get thru to the people not paying attention to politics and how it is ruining our lives…

ChuckTX on March 1, 2012 at 11:05 AM

The best way to destroy the middle class is grind them between taxation and inflation.

V. I. Lenin

NaCly dog on March 1, 2012 at 11:05 AM

Look at that volatility.

WeekendAtBernankes on March 1, 2012 at 11:06 AM

I can’t comment on the veracity of the 8% figure. What I can tell you is that gas is way more expensive. Food at the supermarket is more expensive(or the same price but in smaller quantities). And restaurants and fast food joints are raising their prices. And since food and fuel are essentials, we’re basically screwed on that count.

Doughboy on March 1, 2012 at 11:06 AM

Oh F#^@*&!, I feel great enthusiasm building to vote this numbskull out office.

jake49 on March 1, 2012 at 11:06 AM

About the only things I buy these days are gas and food. Can’t afford anything else.

rbj on March 1, 2012 at 11:03 AM

Don’t worry, the gov’t will pick up the baby-punishment-prevention tab for you.

Don’t worry, it’s free. It doesn’t cost anyone anything!

WeekendAtBernankes on March 1, 2012 at 11:08 AM

Probably mostly being driven by gas prices; there is an inflation risk here, but it is not yet pronounced enough to be worrying the markets. Meanwhile, first time claims for unemployment dipped again this week (unexpectedly) and the 4-week average continued to trend down, while personal income and spending both rose in January. More good news following the unexpected upgrade of 4Q11 GDP yesterday to 3%; we’ll be watching the employment report tomorrow to see if we can complete the hat trick. So far, so good … markets are up.

TouchdownBuddha on March 1, 2012 at 11:08 AM

Nightmare scenario is for us to take the WH and shortly thereafter, the economy goes into a double dip. *shudder*

a capella on March 1, 2012 at 11:08 AM

And since food and fuel are essentials, we’re basically screwed on that count.

Doughboy on March 1, 2012 at 11:06 AM

In Soviet Russia, food is fuel.

Oh… Oh, wait…

WeekendAtBernankes on March 1, 2012 at 11:09 AM

Don’t worry, the gov’t will pick up the baby-punishment-prevention tab for you.

Don’t worry, it’s free. It doesn’t cost anyone anything!

WeekendAtBernankes on March 1, 2012 at 11:08 AM

Heck why worry about babies, you can always kill them after they’re born.

rbj on March 1, 2012 at 11:10 AM

Today the reported economic news was all positive…retail sales, applications for unemployement, etc. These “inside baseball” numbers mean nothing to the general public. If the next jobs numbers are good, Obama will be at 55% approval in no time.

gumbyandpokey on March 1, 2012 at 11:10 AM

Federal Reserve Chairman Ben Bernanke downplayed the long-term consequences of high gasoline prices on Wednesday, while urging lawmakers to establish a careful plan to restore the country’s fiscal sustainability.

How do you downplay the cost of everything and anything related to fuel prices going up? Food, transportation, clothing, nah ….. that won’t affect us folks.

And Ben, you need to take a course in politics 101, lawmakers are incapable of formulating a plan, careful or otherwise.

I think he’s caught a serious case of Obama BS disease.

fogw on March 1, 2012 at 11:11 AM

The Bureau of Labor Statistics is just another Obama campaign branch office. When will the conservative blogosphere and media wake up to this fact?

This is a good first start, Ed. Thanks for posting.

See http://www.shadowstats.com for the real story, plus explanations of how the federal government lies through its teeth putting out bogus economic numbers that will be dutifully repeated in the gullible/compliant press and presented to the clueless public as gospel.

The government wouldn’t lie, would it?

Well, only in our, I mean “their,” best interest.

Stepan on March 1, 2012 at 11:12 AM

Bernanke also told Zero that the funemployment games are over.

No one believes the zero anyway. They have to deal with reality that proves him a bald faced liar, each and every day.

dogsoldier on March 1, 2012 at 11:12 AM

Everyday prices are up

Yeah. Too bad the idiots in the current administration aren’t aware of that. Not to worry, Lil’ Stevie Chu is working hard to drive fuel prices even higher.

GarandFan on March 1, 2012 at 11:14 AM

8% is probably too low too. 3.1% is absurd.

The official measures or unemployment an inflation are useless except for propaganda purposes.

forest on March 1, 2012 at 11:15 AM

As you buy groceries, note the size of the pack in addition to the price tag. Many manufacturers hide the price increase behind smaller packages. I am sure governmental bean counters pretend not to notice.

Archivarix on March 1, 2012 at 11:15 AM

Stepan on March 1, 2012 at 11:12 AM

I’ve been bangin’ that drum for a while now, and so have others here at HA, Especially Ed.

dogsoldier on March 1, 2012 at 11:15 AM

The only reasons we don’t have terrible double digit inflation, right now, is the country is still in actual recession and the Fed is still printing virtual money!

When we’re forced pay the piper all hell will break loose.

I can’t help but think that’s part of the liberal plan to blame their malfeasance on the Right, again.

Speakup on March 1, 2012 at 11:15 AM

Bah, ObamaCare will take care of this as Soylent provides fuel, food, and reduces excess population.

Problem solved. Now lay back and make your selections of favorite music, color, and background.

Bishop on March 1, 2012 at 11:15 AM

Speakup on March 1, 2012 at 11:15 AM

And Zero’s ministry of happy news manipulates the numbers to make them cheerful.

dogsoldier on March 1, 2012 at 11:16 AM

I’ve been bangin’ that drum for a while now, and so have others here at HA, Especially Ed.

dogsoldier on March 1, 2012 at 11:15 AM

Thanks, dogsoldier. Keep it up!

Stepan on March 1, 2012 at 11:17 AM

“Federal Reserve Chairman Ben Bernanke downplayed the long-term consequences of high gasoline prices on Wednesday, while urging lawmakers to establish a careful plan to restore the country’s fiscal sustainability. …”

As usual, Mr. Bernanke is playing fast and loose with reality.
The push-back is coming and it won’t be long before the incompetence of the Chicago Regíme is exposed for all to see. Of course one may need to remove the blinders, but the price at the pump just might be of assistance.
Facts are pesky things.
~(Ä)~

Karl Magnus on March 1, 2012 at 11:18 AM

As you buy groceries, note the size of the pack in addition to the price tag. Many manufacturers hide the price increase behind smaller packages. I am sure governmental bean counters pretend not to notice.

Archivarix on March 1, 2012 at 11:15 AM

Bingo.

Jar of Mayo, was 32 oz, now 30 oz, and higher priced.
Can of Tuna, was 6 oz, now 5 oz, holding 6 oz price.
Bag of Chips, was 11.5 oz, now 8 oz, same size bag half empty.

Everything is up and packaging is shrinking.

fogw on March 1, 2012 at 11:20 AM

As you buy groceries, note the size of the pack in addition to the price tag. Many manufacturers hide the price increase behind smaller packages. I am sure governmental bean counters pretend not to notice.

Archivarix on March 1, 2012 at 11:15 AM

Yeah, I swear the Nature’s Own loaves of bread I buy are smaller than they used to be. I don’t mind that as much since I never finish those loaves before they go bad, but I also saw that the amount of meat in the packages of turkey cold cuts I buy have gone down. It used to be 720 calories a pack. Now it’s 630 and the ingredients haven’t changed one bit. That’s a 10% reduction in the amount of food with the price unchanged, which is very close to the 8% inflation rate we’re now being quoted. Coincidence?

Doughboy on March 1, 2012 at 11:21 AM

The first sign of inflation is gasoline. It use to be milk, or bacon.. but it is gasoline for the most part now.

The best way to destroy the middle class is grind them between taxation and inflation.

V. I. Lenin

NaCly dog on March 1, 2012 at 11:05 AM

Ny, I don’t think we have had a middle class for a while. Does that mean they have won?

upinak on March 1, 2012 at 11:21 AM

I’d be surprised inf inflation wasn’t near 10%. I f*#@ing hate the democrat party.

tom daschle concerned on March 1, 2012 at 11:03 AM

Um, you do know Bernanke was first nominated for Fed chairman by Bush, right? And that leadership of both parties support in principle central monetary planning by the Federal Reserve?

If you want to end monetary inflation, you should join Ron Paul’s effort to end the Fed. Just blaming it on Democrats is counter-factual.

Inkblots on March 1, 2012 at 11:22 AM

If you want to end monetary inflation, you should join Ron Paul’s effort to end the Fed. Just blaming it on Democrats is counter-factual.

Inkblots on March 1, 2012 at 11:22 AM

go beat your sorry excuse for a greedy earmark grabbing politician somewhere else.

upinak on March 1, 2012 at 11:24 AM

Come on, say the s-word with me…

STAGFLATION!

(You thought I was going to say something else, didn’t you?)

Steve Eggleston on March 1, 2012 at 11:24 AM

Just look at the price of beer. You used to be able to get a decent sixpack (not Budweiser, actual “beer”) for $5.99 a six pack.

Good luck getting it for less than $7.99 a six-pack and with the price of gas going up AGAIN, it’s will soon be $8.99 or $9.99.

Another reason to hate Democrats.

NoDonkey on March 1, 2012 at 11:24 AM

We have been feeling the pinch for a while now. The grocery bills and gas are really hurting the budget. Not sure why these are not taken into account. You can live without television, but how do you live without gas and groceries? I guess that’s a welcome to Obamaville :-)

antisocial on March 1, 2012 at 11:26 AM

Just look at the price of beer. You used to be able to get a decent sixpack (not Budweiser, actual “beer”) for $5.99 a six pack.

Good luck getting it for less than $7.99 a six-pack and with the price of gas going up AGAIN, it’s will soon be $8.99 or $9.99.

Another reason to hate Democrats.

NoDonkey on March 1, 2012 at 11:24 AM

And that’s what will turn Wisconsin and Minnesota red…

Archivarix on March 1, 2012 at 11:26 AM

Inkblots on March 1, 2012 at 11:22 AM

piss off wingnut. Democrat policies over the past 40 years have been driving the value of the dollar down. Ron Paul is a clown, and his devotees are absurd.

tom daschle concerned on March 1, 2012 at 11:27 AM

They have made it easier to get on food stamps.What happens when most of the country is getting them?

docflash on March 1, 2012 at 11:29 AM

Not sure why these are not taken into account. You can live without television, but how do you live without gas and groceries? I guess that’s a welcome to Obamaville :-)

antisocial on March 1, 2012 at 11:26 AM

You can both eat and fuel your car with algae.

NoDonkey on March 1, 2012 at 11:29 AM

“And that’s what will turn Wisconsin and Minnesota red”

I’m in WI and Obama is probably more popular here than any other state except for IL, NY or CA. All the recent polls have his approval in the mid 50′s and he destroys both Romney and Santorum by high single digits. For whatever reason, the people here love him.

gumbyandpokey on March 1, 2012 at 11:29 AM

Gee, if Ben Bernanke says I don’t need to worry about inflation, well, then I just won’t. I will close my eyes and whistle a happy tune as I spend $70 to fill the tank in my Mini Cooper on my way to the grocery store where two bags will set me back $100. Nope, nothing to worry about. No siree!

natasha333 on March 1, 2012 at 11:30 AM

go beat your sorry excuse for a greedy earmark grabbing politician somewhere else.

upinak on March 1, 2012 at 11:24 AM

Santorum? Romney?

Aizen on March 1, 2012 at 11:30 AM

Bernake probably has someone else going to the store to buy his arugula. I do the shopping for my familly and iIm feeling it in my wallet. Our buisiness has crews out on the road so we either make less or price our product higher. We’ll probably take it in the wallet. People dont spend when theres uncertainty either. We’re holding off on a trip we’d hoped to take. Additional landscaping we had planned. The list goes on.

ldbgcoleman on March 1, 2012 at 11:33 AM

go beat your sorry excuse for a greedy earmark grabbing politician somewhere else.

upinak on March 1, 2012 at 11:24 AM

Yawn. Paul votes against every unbalanced spending bill – you can’t blame any deficit spending, whether on penny-ante local projects or huge entitlement programs like Medicare part D (thanks again, Santorum!) on him.

But way to avoid addressing the point of my comment – if you care about inflation and the debasement of the dollar, Paul is the only candidate proposing monetary reform. And frankly, you really should care about it – it’s the most important issue facing this country. The dollar is one half of nearly all transactions in our economy, and artificial distortions of its value by central planners with incomplete knowledge of the system state touch everyone.

Paul wants to resolve the knowledge problem by turning to market-based money, everyone else thinks economic central planning from Washington is the way to go. History is on the side of one of those arguments – can you guess which?

Inkblots on March 1, 2012 at 11:33 AM

I think that when one judges monetary policy, it is vital to look at the causes of price increases. When prices rise because of increased demand or supply constrictions I don’t think that the Fed should respond. I do not think that we have monetary inflation in our economy right now. That is because the demand for money is so small.

Rising prices for various commodities is the supply and demand curves at work. Under our current circumstances, it is a signal to producers to make more. It is probably not a signal that we have too much money sloshing around. The BRIC nations, and other emerging economies are demanding more food and energy and prices should rise in response.

This isn’t to say that I agree with Helicopter Ben’s ridiculously easy money supply policies, but I don’t think that they are the cause of the food and energy price increases.

MJBrutus on March 1, 2012 at 11:36 AM

If you want to end monetary inflation, you should . . .end the Fed. Just blaming it on Democrats is [wrong].
Inkblots on March 1, 2012 at 11:22 AM

And that’s a fact, Jack!

It’s the Fed’s loose-money policy which enables the Democrats to spend at will and run up the huge debts in the first place.

The failure to stop raising the debt ceiling–which was engineered by Boehner, a Republican–was even worse.

Emperor Norton on March 1, 2012 at 11:37 AM

Everyday prices are up

Yeah. Too bad the idiots in the current administration aren’t aware of that. Not to worry, Lil’ Stevie Chu is working hard to drive fuel prices even higher.

GarandFan on March 1, 2012 at 11:14 AM

It boggles the mind. What are they thinking. Re: food, never eat out, buy on sale, watch every purchase. Tropicana OJ half gallon is now 59 ounces? WTF! Food prices go up, they never go down. Obama: “Gas prices will necessarily skyrocket”. Necessary for who? The Sierra Club? At least Clinton PRETENDED to feel our pain.

Paul-Cincy on March 1, 2012 at 11:38 AM

I’m in WI and Obama is probably more popular here than any other state except for IL, NY or CA. All the recent polls have his approval in the mid 50′s and he destroys both Romney and Santorum by high single digits. For whatever reason, the people here love him.

gumbyandpokey on March 1, 2012 at 11:29 AM

Union money will buy a lot of enthusiasm, and Madison starts with ‘Mad’ for a good reason. But outside of urban and university ghettos, Scott Walker’s endorsement may become a game changer.

Archivarix on March 1, 2012 at 11:39 AM

Inkblots on March 1, 2012 at 11:33 AM

You do realize that the Ron Paul nomination ship has sailed don’t you?

Now, if you’d like to see him as part of the next administration that isn’t trying to Downgrade the country (perhaps as Fed chairman or something) I could agree with that sentiment.

But as far as having a shot at the top post – that is truly delusional.

Chip on March 1, 2012 at 11:39 AM

Wow 8%! That was “un-expectantly” high!

Let me guess…. Someone FORGOT a carry over when running the arithmetic, right?

(That’s a a mathmatical step for those in Rio Linda or democrat)

No harm, no foul…. /sarc

mr_west on March 1, 2012 at 11:39 AM

Bernanke isn’t concerned about the inflationary impact of rising gas prices. The Energy Secretary isn’t worried about the cost of gas. Obama thinks there may only be four Presidents greater than he and he is already talking about all he will do with the remaining five years of his Presidency. In short, while this nation is being destroyed those in charge are pretending that everything is better than it ever has been before.

We are becoming more like some third world dictatorship or the old Soviet Union every day.

Happy Nomad on March 1, 2012 at 11:41 AM

At least Clinton PRETENDED to feel our pain.

Paul-Cincy on March 1, 2012 at 11:38 AM

Yes, the Downgrade Administration is proud of inflecting our pain.

Yes, a great group of folks we have there…

Chip on March 1, 2012 at 11:41 AM

Gas and groceries are eating into our budget in a huge way.

We crunched some numbers and decided to use our tax refund (far less than we paid in, so we are NOT one of the 49% that don’t pay any taxes ;)) AND sell some of hubby’s vacation days to buy a bigger freezer and a half of a cow to try to beat the inflation at the store. We’ve been “priced out” of beef for awhile now because the prices have become so high. We were able to get 300 lbs of beef for $2.69/lb. If I didn’t have such a black thumb, I’d be growing veggies and avoid buying as much as possible from the store.

JennM111 on March 1, 2012 at 11:42 AM

tom daschle concerned on March 1, 2012 at 11:27 AM

Then why was Steve Forbes, and countless other economists, begging Bush 43 to prop up the dollar from the first day of his first term? But they did nothing. Inkblots is right, both parties (the establishments on both sides of the aisle) want a cheap devalued dollar for many reasons. Do some research. Start at Forbes.com

jb34461 on March 1, 2012 at 11:43 AM

All the recent polls have his approval in the mid 50′s and he destroys both Romney and Santorum by high single digits. For whatever reason, the people here love him.

gumbyandpokey on March 1, 2012 at 11:29 AM

The only poll that matters is the one that takes place on November 6th.

Happy Nomad on March 1, 2012 at 11:45 AM

piss off wingnut. Democrat policies over the past 40 years have been driving the value of the dollar down. Ron Paul is a clown, and his devotees are absurd.

tom daschle concerned on March 1, 2012 at 11:27 AM

It’s so refreshing to debate with a respectful, reasonable opponent.

So it’s all the Dems fault, eh? You mean like how, under G. W. Bush, the deficit grew by 67%, much of that while the GOP controlled both houses of Congress, as well as the White House? And how under Bush, the Fed increased the adjusted monetary base by 150%? (see here: http://research.stlouisfed.org/fred2/series/BASE)

The deficit also increased mightily under Reagan and G. H. W. Bush, albeit with Democrats in control of Congress. The point is, the deficit and inflationary policies from the Fed are the fault of both parties working together over decades. To try and blame it on all on the other guys might make you feel good, but it’s simply not true.

Inkblots on March 1, 2012 at 11:45 AM

Have you seen the price of argula!

Deafdog on March 1, 2012 at 11:46 AM

I blame Food Stamps.

If the govt. is paying does one care as much about prices???

albill on March 1, 2012 at 11:48 AM

go beat your sorry excuse for a greedy earmark grabbing politician somewhere else.

upinak on March 1, 2012 at 11:24 AM

Earmarking is just the legislature deciding how money that has already been budgeted gets spent rather than the executive branch. Ron Paul votes against all spending proposals, even if he put an earmark in it to ensure his county gets at least some of it’s tax money back even if it’s in federal spending. He’s the opposite of greedy, you sorry excuse for a smear-peddler.

ebrawer on March 1, 2012 at 11:50 AM

Thanks, dogsoldier. Keep it up!

Stepan on March 1, 2012 at 11:17 AM

I will, and I hope that you and others here will also.

dogsoldier on March 1, 2012 at 11:52 AM

There’s a reason the Fed looks at core CPI (that is, consumer price inflation index without food or energy costs): it’s what they can even hope to influence primarily through monetary policy.

Perhaps it’s true that EPI is what ordinary consumers feel, rather than core CPI. But EPI is absolutely useless to the Fed—they cannot tame the volatility in the energy costs by monetary policy alone, and if they attempt to, it will become a destabilizing disruption to the overall economy.

novakyu on March 1, 2012 at 11:56 AM

In Orwell’s 1984, Big Brother had these ministries:

Ministry of Peace
Ministry of Plenty
Ministry of Love
Ministry of Truth

We’re moving closer to this reality each and evey day. Pisses me off to no end.

jb34461 on March 1, 2012 at 11:59 AM

In Orwell’s 1984, Big Brother had these ministries:

Ministry of Peace
Ministry of Plenty
Ministry of Love
Ministry of Truth

We’re moving closer to this reality each and evey day. Pisses me off to no end.

jb34461 on March 1, 2012 at 11:59 AM

This makes me think of how Obama twists the Bible to serve his vision of big government.

Paul-Cincy on March 1, 2012 at 12:02 PM

I’m sure gas prices will go higher if Chu and the current Occupier have their way. Maybe the inflation is contributing to higher prices, somebody call BOR.

Kissmygrits on March 1, 2012 at 12:04 PM

Nearly everything we buy is shipped by truck and the shipping cost is folded into the price of the products so not counting fuel in the CPI doesn’t really eliminate it, but that was never the purpose. It was done to deceive people. Ordinary people do not need a degree in economics to know they are being lied to.

dunce on March 1, 2012 at 12:10 PM

Fed chair said that gas price hikes would temporarily bump inflation upward and reduce disposable income…

So a reduction in DI is now a bad thing?

This reminds me of an argument I made in my macroeconomic class to my Keynesian professor (many moons ago)… he was arguing that the redirection of wealth from earners to the government to the “poor” had no impact on an economy because “it doesn’t matter if the government buys 10 TVs or if the population buys 10 TVs”. Of course, the obvious answer is that 10 people don’t have TVs, but what does he care? (And the Left never want to talk about the incentive and investment needed to create wealth in the first place.)

We need to understand the velocity of money through an economy and the consequent number of people who touch that money. The concentration of wealth in any one sector is always bad for the greater economy.

To sum, I’m always amused at how Leftists can bemoan a small concentration of wealth into a sector like oil while believing that a massive concentration of wealth into the government sector (a sector that adds nothing to the standard of living) is nothing to be concerned about… and that it’s really a good thing.

mankai on March 1, 2012 at 12:10 PM

I have little to no faith in the American public. The barbarians could be at the gates, their savings could be on the verge of being worthless, their employment prospects could be reduced to nil, and as long as those bad Republicans were threatening to take away a woman’s sacred right to choose – or whatever other excuse was drummed up at the moment – they’d vote 270-268 for Obama.

Aquarian on March 1, 2012 at 12:12 PM

Nearly everything we buy is shipped by truck and the shipping cost is folded into the price of the products so not counting fuel in the CPI doesn’t really eliminate it, but that was never the purpose. It was done to deceive people. Ordinary people do not need a degree in economics to know they are being lied to.

dunce on March 1, 2012 at 12:10 PM

My high-school-age kids figured this out. I asked them how does stuff get to the grocery store. They answered “by trucks”… I added, “so if the price of gasoline goes up?” They immediately knew “the price of everything shipped will go up.”

Democrats only understand that if a Republican is in office… and even then I’m not sure they truly understand it.

mankai on March 1, 2012 at 12:13 PM

Local Walmart Since me and my wife moved into our new house January 2011…
Hamburger 73% lean is up almost 250% from $1.25 to now $4.28
Milk is up 21% from $2.29 to $2.78
Bread is up 37%
Hamburger helper is up 68%
Hot dogs are up 111%
Cheese is up 67%
Yogurt is up 35%
This list goes on and on and on. We price match almost exclusively now and the sale prices are way higher than in the past. About the only things I can rely on getting on sale once every two weeks are milk and eggs. Milk sale $1.57 and eggs 12 large AA about $1.00.

Good times, good times.

astonerii on March 1, 2012 at 12:14 PM

Is anyone really surprised? The way they measure the cost of living changed about 20 years ago. It used to be if salmon went from 3.00 per pound to 3.25, they would call that an increase. Now they say, if a pound of salmon goes from 3.00 up to 3.25, then people would rather buy hotdogs at 2.25 per pound. Therefore, the cost of meat went down.

What’s also not factored is attrition. They say newer products have more features and technology so for $350.00 we get more television for the buck. So, they adjust the cost of a television down from $350.00 to $275.00 (for example) and say the cost is down. Problem is, our parents television lasted 20 years. Today they may last 5 years if you’re lucky.

They have also taken out of the index housing cost. Why, because it’s up between 250% to 1000% over what our parents paid in 1950′s & 60′s for their home. Same is true for Auto’s and Education. Which are both up dramatically over the past 40 years. 3 months wages used to buy a new car. How many months do you have to work now for the same. I went to college on a small athletic scholarship ($800.00 a semester) and I saved over the summer and paid my own way at about $35.00 to $50.00 per credit hour. That was in the 1980′s. What’s it today? $350.00 per credit hour or more.

The cost of living is also measured against the pure dollar and doesn’t account for taxation. So the same $1000.00 take home in 1950 means you may have had to earn $1175.00. Today you have to earn $1400.00 to take home $1000.00. This means alot more hours of work for the same result.

8% is still low. But hey, if you own a ton of stock and the cost of your product increases while wages remain stagnat, then good for some I guess.

mtucker5695 on March 1, 2012 at 12:22 PM

To quote Yogi Berra: “It feels like deja vu all over again.”

I remember the good old days of the Peanut Farmer’s reign, standing in front of the meat counter and having heart palpitations. But it won’t truly be deja vu until the grocery stores start selling ground beef laced with soy protein nuggets in order to make ground beef affordable for the middle class.

catsandbooks on March 1, 2012 at 12:31 PM

Look at that volatility.

WeekendAtBernankes on March 1, 2012 at 11:06 AM

I’ve been saying that the market volatility is representing the risk due to 0zero. Volatility is not measuring much more than the fear that investors have that 0zero will further erode their wealth, their health, and their future.

I no longer have words to describe them. Statists and similar words are too sterile. These are despicable, evil people.

freedomfirst on March 1, 2012 at 12:45 PM

And arugula is up to $15 a pound.

profitsbeard on March 1, 2012 at 12:53 PM

Just wait until we get some velocity on that money that the Fed has been working day and night to print over the last few years.

besser tot als rot on March 1, 2012 at 11:03 AM

Yep; inflation has been held down by the busted Obama economy, and that includes the price of gasoline. It would be well over $5 today if the economy was in recovery.

slickwillie2001 on March 1, 2012 at 12:53 PM

I hate them! I HATE THEM!

KOOLAID2 on March 1, 2012 at 1:43 PM

We never look at the right problem. It’s the REGULATION, folks. This is what it looks like for government to REGULATE every aspect of the economy. If not for REGULATION, more of us would have jobs, it wouldn’t be as much of an uphill struggle to earn enough to live on and also pay taxes, and the necessities of life would be cheaper.

Gas would be far cheaper without REGULATION. We’d pump more of it and refine more of it here. We wouldn’t have idiotic programs to put subsidized ethanol in it, which simply costs us in a different way (through taxes and, increasingly, the inflation-generator of debt).

Gas has the most immediate effect on the prices of consumer non-durables, but REGULATION on employment and other business operations (safety, “environmental impact”) keeps prices up independently. If you want to know why the price of a box of crackers has outpaced core inflation over the last 50 years, your answer is: REGULATION. The purchase of consumer goods pays for the cost of regulation on industry. You can’t make “business” pay for anything without making prices do up.

REGULATION is a method by which government extracts a premium from our labor. It does this in different ways, some direct and some indirect. But we pay for all REGULATION, and today, we are working so hard to pay for the REGULATION that we have less discretionayr purchasing power, and for the same amount of effort on our part, we are getting less of the products we choose to buy.

J.E. Dyer on March 1, 2012 at 2:22 PM

Weird how all the liberals are missing from this thread.

rogerb on March 1, 2012 at 3:06 PM

Over the past year, the EPI is up just over 8 percent, according to the economics group.

CBO: Real unemployment (U-3) is 10%.

MI = U3 + EPI

Barack Obama’s MI = 18%

Jimmy Carter ended his reign of error and terror with a MI of 19.72%.

Resist We Much on March 1, 2012 at 3:17 PM

Lol… sooo….

Ron Paul is right, AGAIN?

You poor neocons.

iamse7en on March 1, 2012 at 3:17 PM

It’s a shame the old laws are simply ignored.

For example, Section 19 of the Coinage Act of 1792 made it a felony (punishable by death) for the debasement of the currency of the United States.

I wonder if that part of the law was ever replaced…

dominigan on March 1, 2012 at 3:28 PM

Ron Paul is right, AGAIN?

You poor neocons.

iamse7en on March 1, 2012 at 3:17 PM

Wow! So only Paul Pot and the Paulistinians have been talking about M0 for years? So, if I am not a Paulistinian, even though I am a libertarian, that somehow makes me a neocon?

Gee, you be so smart.

Yeah, Paul Pot’s been talking about money for years…in more ways than just one….

CALLER: But Dr. Paul, many of the newsletters are filled with conspiracies. You had one newsletter from start to finish with fear that the $50 bill, because it was going to be made pink, and it was gonna have all kinds of things that can track us down, so we should all be afraid that maybe tomorrow they’re gonna require us to turn in all of our old money.

PAUL: The paper money now is pink, you know? No, we haven’t had runaway inflation, but I still fear that.

Well, I guess we know what Ron Paul fears more than Iran getting the bomb. Pink money. Hmmmm…. My Adam Lambert-dar is going off. Are there any gay readers out there that might have struggled with their sexuality and the colour pink? Can you advise us if you think that there are some suppressed, latent tendencies here based on your own experiences?

Ron Paul: All Aboard! Ha Ha Ha Ha Ha Ha Haaaa! Mental Wounds Still Screaming! Driving Me Insane I’m Going Off The Rails On My Crazy Train! (And I Want To Take You Along For The Ride)

Here ya go, baby:

Napoleon XIV They’re Coming To Take Me Away Ha Haa!!

Resist We Much on March 1, 2012 at 3:30 PM

Food at the supermarket is more expensive(or the same price but in smaller quantities).

Doughboy on March 1, 2012 at 11:06 AM

I was in the supermarket last week an Mullers was selling their macaroni at 89 cents a box while Ronzoni was at a buck and a half a box. After looking at the Muller box, the net weight was 12 ounces and people thought this was a bargain. I guess it was a bargain at a buck twenty if the box had 16 ounces. Tuna fish went from 5 ounces to 3 ounces a can…same with coffee…from 13 ounces to 9.5 ounces.

timberline on March 1, 2012 at 3:58 PM

I’m not a economics student so I am trying to figure this out, if inflation grows by 8% but the economy only grows 3% is that really negative -5 % growth? Might be apples and oranges but still I’m kinda wondering.

maddmatt on March 1, 2012 at 4:05 PM

I’m not a economics student so I am trying to figure this out, if inflation grows by 8% but the economy only grows 3% is that really negative -5 % growth? Might be apples and oranges but still I’m kinda wondering.
 
maddmatt on March 1, 2012 at 4:05 PM

 
Good question. I’m guessing it has more to do with the money supply than any economic health. All that, ahem, quantitative easing (creating money backed by nothing that erodes the value of all the dollars already in our wallet) has to catch up eventually, and I wouldn’t doubt if they ignore it in their “growth” calculations.
 
FWIW, inflation and quantitative easing (printing money) = tax increases. Never look at either in any other way.

rogerb on March 1, 2012 at 6:32 PM

maddmatt on March 1, 2012 at 4:05 PM

It’s a way to look at it. But inflation is an iffy metric, whereas GDP growth is based on a more objective standard. If war starts in the ME and the price of oil shoots up because of supply disruption prices will rise. But I would not consider that to be monetary inflation. I consider that to be the free market signaling producers to supply more energy.

MJBrutus on March 1, 2012 at 6:38 PM

They’re all full of crap. Food prices where I shop are up 25% in less than two years. Everything I eat. Beef is off the charts — what was $3 a pound is now $4.75 a pound; bread is up 33% — what was $2.99 is now $3.99 (this is a rather unscientific analysis, needless to say); produce … pick a number; it’s all waaaayyyy up. Fruit juice is up a buck a bottle.

Bernanke and O’Bozo have ruined the dollar and nothing it worth what it was, so the producers want more money. Effing liars.

Jaibones on March 1, 2012 at 8:15 PM