December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

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Patzer
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December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Patzer »

When forecasting 2022 inflation we have to consider what prices rose in 2021 and why.
Certainly, there was a demand based rise in inflation across the board, but 56.1% of the 7.04% increase in the CPI-U in 2021 came form cars and energy.

Energy: 7.542% of the CPI-U rose 29.3% -> .07542*29.3= 2.21%
New Cars: 3.884% of the CPI-U rose 11.8% -> 0.03884*11.8= 0.46%
Used Cars: 3.419% of the CPI-U rose 37.3% -> 0.03419*37.3= 1.28%
1.28+2.21+.46=3.95%.

3.95% of the CPI-U's 7.04% inflation came from those sources, and they only make up ~15% of the index.

If the other 3.09% (7.04-3.95) is divided across the remaining 85.155% (100-3.419-3.884-7.542) of the CPI-U, you get inflation in other areas of the economy at an average of 3.63% (3.09/.85155).

Why does that matter?
1. Cars had their prices rise due to a supply chain issues. Car prices, especially used car prices can't rise at that unsustainable rate in 2022. I suspect they will continue to rise much more moderately until the Fall, where I expect them to deflate as the 2023 models start to hit lots.

2. Energy was rising from a very low floor and is now at a pretty healthy and sustainable price. If December's 1.1% deflation is any clue, then 2022 should be a lot more mild in this area.

Other factors
3. Deflation has started to creep into overpriced categories, i.e. December saw a 2.3% decline in beef prices, 2.1% decline in pork prices, 3.7% decline in TV prices, and a 4.4% decline in car rental prices. These are small in the grand scheme of things, but represent an increasing number of items where the pricing pendulum has swung too far and they are now coming back towards equilibrium. There are many small categories that contributed to 2021 inflation, but will be far milder in 2022.

4. Rent prices were suppressed through most of 2021, and that will play out in 2022 as people sign new leases or extend leases at higher prices.
Shelter has been running at .4-.5% per month since October.
Shelter makes up 32.393% of the CPI-U, and I suspect it will end up being the largest driver of inflation in 2022.

Conclusion:
2022 inflation will be dramatically lower than 2021 and be driven by different factors.
Something in the neighborhood of 3.3-4% seems most likely.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by quisp65 »

Is 2021 inflation 4.7%? That the average of 12 months.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Chip »

Nice analysis.

I do wonder if the shortages of front line labor and the resultant wage increases will continue to feed into price increases.

But since I can't afford a crystal ball anymore I'll just accept what comes. :D
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Patzer »

quisp65 wrote: Wed Jan 12, 2022 10:13 am Is 2021 inflation 4.7%? That the average of 12 months.
2021 inflation was 7.04% if you include all categories.
5.5% if you exclude energy and food, which are more volatile traditionally
3.63% if you exclude energy and cars, which for the reasons I stated above were more volatile in 2021 than they are likely to be in 2022.

https://www.bls.gov/news.release/pdf/cpi.pdf
Chip wrote: Wed Jan 12, 2022 10:15 am Nice analysis.

I do wonder if the shortages of front line labor and the resultant wage increases will continue to feed into price increases.

But since I can't afford a crystal ball anymore I'll just accept what comes. :D
I think wage increases at the low end of the pay spectrum have largely been priced in as that pressure existed throughout 2020-2021 with enhanced unemployment insurance and even more strongly with wage competition from other companies in 2021.
There are companies that were hoping that would pass and tried to avoid rising wages. I think their hands will be forced in 2022, if they haven't already been, which will contribute to a continued increase in prices of goods and services created by lower wage workers, but that will be more modest than 2021.

Accepting what comes makes sense, but I know a lot of people have panicked about high inflation and considered changing course, because of it.
I wanted to point out that inflation is unlikely to continue at this exaggerated level and encourage people to continue to stay the course, perhaps with a few minor tweaks, like buying some I-Bonds, since they currently pay more than open market bonds do and that is likely to continue for at least another year.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by jebmke »

Patzer wrote: Wed Jan 12, 2022 10:20 am I think wage increases at the low end of the pay spectrum have largely been priced in as that pressure existed throughout 2020-2021 with enhanced unemployment insurance and even more strongly with wage competition from other companies in 2021.
Also continuation of automation.

The local Royal Farms (gas mini-mart) used to have 4-6 clerks when it was busy. Now one person monitors self-checkout and takes care of the few who can't master the scan and go system or need/desire to pay cash. Their coffee machines are now grind & brew so they have no need to have someone constantly replacing and cleaning coffee urns.

Been a while since I was in Walmart but I recall there was one clerk for the whole store and an entire bank of scan and go self-checkout terminals.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Chip »

Patzer wrote: Wed Jan 12, 2022 10:20 am think wage increases at the low end of the pay spectrum have largely been priced in as that pressure existed throughout 2020-2021 with enhanced unemployment insurance and even more strongly with wage competition from other companies in 2021.
I guess we'll see.

But given continuing labor shortages (I'm seeing a lot of help wanted signs) I don't think the pressure to pay higher wages has really abated.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by brian91480 »

Inflation may be a little less in 2022... who knows. But it will still be high. Based on this article below.... the lower total inflation may be MORE PAINFUL for everyone this upcoming year.

The OP points to a lot of 2021 inflation being centered on just a few things... but what happens if the impacted categories of goods and services widens?

"Overall, Faucher predicts inflation will be lower in 2022 as reopening-specific inflation fade, but expects it to also be more broad-based, affecting a wider variety of goods and especially services."

https://fortune.com/2021/12/03/inflatio ... ry-yellen/

--- Brian
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by JoMoney »

3.63% inflation? The price to for new leases in the apartment complex I'm in have gone up 36.3% (no joke) just over the past year.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Thesaints »

Forecasting inflation and exchange rates are two notoriously difficult activities. That's why indexed bonds and currency swaps exist.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Fat-Tailed Contagion »

If you bought groceries in the last year.
If you bought gas in the last year.
If you bought a car in the last year.
If you bought a house in the last year.

You KNOW inflation isn’t 7%.

RENTs are up 50% year over year in our State where everyone seems to be migrating to - you could probably guess which State it is.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by rob »

It was zero if you didn't buy anything that went up.....
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by smectym »

Patzer wrote: Wed Jan 12, 2022 10:20 am
quisp65 wrote: Wed Jan 12, 2022 10:13 am Is 2021 inflation 4.7%? That the average of 12 months.
2021 inflation was 7.04% if you include all categories.
5.5% if you exclude energy and food, which are more volatile traditionally
3.63% if you exclude energy and cars, which for the reasons I stated above were more volatile in 2021 than they are likely to be in 2022.

https://www.bls.gov/news.release/pdf/cpi.pdf
Chip wrote: Wed Jan 12, 2022 10:15 am Nice analysis.

I do wonder if the shortages of front line labor and the resultant wage increases will continue to feed into price increases.

But since I can't afford a crystal ball anymore I'll just accept what comes. :D
I think wage increases at the low end of the pay spectrum have largely been priced in as that pressure existed throughout 2020-2021 with enhanced unemployment insurance and even more strongly with wage competition from other companies in 2021.
There are companies that were hoping that would pass and tried to avoid rising wages. I think their hands will be forced in 2022, if they haven't already been, which will contribute to a continued increase in prices of goods and services created by lower wage workers, but that will be more modest than 2021.

Accepting what comes makes sense, but I know a lot of people have panicked about high inflation and considered changing course, because of it.
I wanted to point out that inflation is unlikely to continue at this exaggerated level and encourage people to continue to stay the course, perhaps with a few minor tweaks, like buying some I-Bonds, since they currently pay more than open market bonds do and that is likely to continue for at least another year.
A sensible analysis, and we should also remain aware that powerful deflationary currents are also at work. Not a one-way street.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by JBTX »

Patzer wrote: Wed Jan 12, 2022 10:07 am When forecasting 2022 inflation we have to consider what prices rose in 2021 and why.
Certainly, there was a demand based rise in inflation across the board, but 56.1% of the 7.04% increase in the CPI-U in 2021 came form cars and energy.

Energy: 7.542% of the CPI-U rose 29.3% -> .07542*29.3= 2.21%
New Cars: 3.884% of the CPI-U rose 11.8% -> 0.03884*11.8= 0.46%
Used Cars: 3.419% of the CPI-U rose 37.3% -> 0.03419*37.3= 1.28%
1.28+2.21+.46=3.95%.

3.95% of the CPI-U's 7.04% inflation came from those sources, and they only make up ~15% of the index.

If the other 3.09% (7.04-3.95) is divided across the remaining 85.155% (100-3.419-3.884-7.542) of the CPI-U, you get inflation in other areas of the economy at an average of 3.63% (3.09/.85155).

Why does that matter?
1. Cars had their prices rise due to a supply chain issues. Car prices, especially used car prices can't rise at that unsustainable rate in 2022. I suspect they will continue to rise much more moderately until the Fall, where I expect them to deflate as the 2023 models start to hit lots.

2. Energy was rising from a very low floor and is now at a pretty healthy and sustainable price. If December's 1.1% deflation is any clue, then 2022 should be a lot more mild in this area.

Other factors
3. Deflation has started to creep into overpriced categories, i.e. December saw a 2.3% decline in beef prices, 2.1% decline in pork prices, 3.7% decline in TV prices, and a 4.4% decline in car rental prices. These are small in the grand scheme of things, but represent an increasing number of items where the pricing pendulum has swung too far and they are now coming back towards equilibrium. There are many small categories that contributed to 2021 inflation, but will be far milder in 2022.

4. Rent prices were suppressed through most of 2021, and that will play out in 2022 as people sign new leases or extend leases at higher prices.
Shelter has been running at .4-.5% per month since October.
Shelter makes up 32.393% of the CPI-U, and I suspect it will end up being the largest driver of inflation in 2022.

Conclusion:
2022 inflation will be dramatically lower than 2021 and be driven by different factors.
Something in the neighborhood of 3.3-4% seems most likely.
While I really hope your conclusion is right, I kind of doubt it is. Inflation isn't going away quickly.

2021 had heavy rent increases. This said 13.5 % through Nov YOY.

https://www.multihousingnews.com/2021-rent-growth/?amp

Single family homes rent increased 14.7%

This shows apartment rents up between 16-22% for two and one bedroom Apts

https://www.apartmentguide.com/blog/apa ... nt-report/


House prices went up 18.5%. House prices are not part of cpi nor should they be but ultimately higher house prices will lead to higher rental prices.

Housing is about 30% of cpi. The rub is rents are measured based upon what consumers are paying today. This month. Rents tend to stay the same except for annual renewal. So the 14-21% lease rate increases will play out over the following months.

Larry Summers has spoken about this

https://twitter.com/lhsummers/status/14 ... 99621?s=21

Also you have employees quitting at record rates and perpetual labor shortages. Employers are hesitant to raise too much in case this is transitory. But it probably won't be and eventually they are going to have to raise wages which leads to more inflation.

If the fed bucks up and raises rates and fiscal policy is moderated and economy cools at bit maybe we hold to the 5-6% range. If economy stays hot, then perhaps higher.

I'm not optimistic but I really hope I'm wrong.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by KarenC »

Patzer wrote: Wed Jan 12, 2022 10:20 am
quisp65 wrote: Wed Jan 12, 2022 10:13 am Is 2021 inflation 4.7%? That the average of 12 months.
2021 inflation was 7.04% if you include all categories.

5.5% if you exclude energy and food, which are more volatile traditionally
3.63% if you exclude energy and cars, which for the reasons I stated above were more volatile in 2021 than they are likely to be in 2022.

https://www.bls.gov/news.release/pdf/cpi.pdf
The average inflation for 2021 is indeed 4.7%, but that number seems to take a back seat in the headlines (perhaps deservedly so):
Since figures below are 12-month periods, look to the December column to find inflation rates by calendar year. For example, the rate of inflation in 2021 was 7.0%.

The last column, “Ave,” shows the average inflation rate for each year using CPI data, which was 4.7% in 2021. They are published by the BLS but are rarely discussed in news media, taking a back seat to a calendar year’s actual rate of inflation.
https://www.usinflationcalculator.com/i ... ion-rates/
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by muffins14 »

One issue I have with these statistics is that the national average is such a weak measure. There must be a lot of heterogeneity. Sure, average rents maybe went up 13%, but I think that’s not super helpful for policy, in the same way that there is no “average investor”.

For example there’s likely some kinds of units that had no rent increase, or some neighborhoods with no rent increase. And all is great.

Other types of neighborhoods might have had massive rent increases and really be suffering. Still other cases might be big increases in luxury rentals, and should we care much if a $20000 monthly rental has become $27000?

I think we just need more nuance and local data
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Morse Code »

We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by JoMoney »

Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
People have been predicting massive inflation since the quantitative easing that started in 2008, but the helicopter money direct to consumers has been more prolific in recent past.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Willmunny »

Compare the number of dollars created since March 2020 to the number of all dollars in existence. Remember Milton Friedman's observation: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

While production/output/supply drops, the normal reaction is for demand to drop with it. But over the last two years production/output/supply dropped, but the printing press kept the money coming. Some even had more discretionary income than prior to the pandemic. So demand stayed the same or even increased while supply shrank.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by dboeger1 »

Didn't people try to argue the same point a few months or a year ago when the same thing was true of specific sectors like travel and housing? I swear I've seen this exact topic on Bogleheads but with swapped categories. I'll take durable goods for $200!

My point is not that these topics are invalid, but that we shouldn't read too much into these kinds of things when it comes to long-term planning, because if the category of inflation just switches every month, there's really not much any single month's data can tell you.

At the risk of getting side-tracked, I'll just share a personal inflation story. We bought our home in 2020, and shortly thereafter, I was an idiot and backed into the garage door while pulling out. In my defense, the door was open, but I was holding the remote trying to preempt my wife's comments because she would always tell me to close the garage door the instant I pulled out into the driveway, as if I didn't do it in a timely fashion every single time. Anyway, the remote's buttons were extremely sensitive, and I must have triggered it as I was backing out, so the door closed down on top of the back of the door. We can manually open and close the door by hand, but otherwise, the door is broken and needs to be replaced.

We called our home insurance, they confirmed the incident was covered minus our deductible, and they issued a check based on an estimate of $1,200. After getting someone to come out and give us a quote, it came out to around $1,500. So I contacted the insurance claims agent to get it revised, but it turns out she had suddenly gone on an extended leave of absence. I don't know what that was about, but if I had to guess, she probably got sick with the virus. Anyway, it took a long time to get someone else to revise the check amount for us, and by the time they did, the price had risen to $1,800. I was a bit disappointed that it took so long for the insurance company to respond, but I figured constantly begging the insurance company for more money was a recipe for getting higher premiums, and the additional cost wasn't too crazy, so I wanted to absorb the loss. However, my wife hated the notion that we had to pay more simply because we were figuring out the insurance side, and the people told her we could wait and see if prices went down later.

Well, we recently called to check what the latest price was, and it's now up to $3,000 for the same door replacement, with no end in sight. We obviously would really like to get our automatic door working again, but we've just been investing the insurance money the entire time, so now we're just pocketing it and living with the busted door until there's a better buying opportunity. I'm surprised the insurance company has never asked for any kind of confirmation of repairs or anything.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Nate79 »

muffins14 wrote: Wed Jan 12, 2022 11:24 pm One issue I have with these statistics is that the national average is such a weak measure. There must be a lot of heterogeneity. Sure, average rents maybe went up 13%, but I think that’s not super helpful for policy, in the same way that there is no “average investor”.

For example there’s likely some kinds of units that had no rent increase, or some neighborhoods with no rent increase. And all is great.

Other types of neighborhoods might have had massive rent increases and really be suffering. Still other cases might be big increases in luxury rentals, and should we care much if a $20000 monthly rental has become $27000?

I think we just need more nuance and local data
This data exists, it just doesn't make the headline article. You just need to search for CPI-U regional numbers.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by dkturner »

So, those of us who don’t heat our houses or drive have nothing to worry about! 😁
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by LadyGeek »

I removed an off-topic post regarding government manipulation of the Consumer Price Index. These comments are political in nature and off-topic. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
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From the U.S. Bureau of Labor Statistics, here's why:
As an economic indicator. As the most widely used measure of inflation, the CPI is an indicator of the effectiveness of government policy. In addition, business executives, labor leaders and other private citizens use the index as a guide in making economic decisions.
The wiki has further information: Accuracy of the CPI

A tutorial on chained CPI is here: Chained Consumer Price Index For All Urban Consumers (C-CPI-U)
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Marshall-Dillon »

Who needs food and gas anyway?
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by vineviz »

LadyGeek wrote: Thu Jan 13, 2022 8:32 am
The wiki has further information: Accuracy of the CPI
Thanks for the link.

For some reason, the wiki doesn’t outline the reasons that the CPI might overestimate the true rate of inflation (which seems to be the expert consensus).
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by sureshoe »

Patzer wrote: Wed Jan 12, 2022 10:07 am Other factors
3. Deflation has started to creep into overpriced categories, i.e. December saw a 2.3% decline in beef prices, 2.1% decline in pork prices, 3.7% decline in TV prices, and a 4.4% decline in car rental prices. These are small in the grand scheme of things, but represent an increasing number of items where the pricing pendulum has swung too far and they are now coming back towards equilibrium. There are many small categories that contributed to 2021 inflation, but will be far milder in 2022.
Not exactly what you're talking about, but I keep thinking for all this talk of inflation, that we're going to at some point see everything take a step back. Instead of chipping away at all this debt with inflation, it becomes a bigger, nastier burden.

Dunno, hasn't come to fruition since 2007-ish.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by vtsnowdin »

I doubt the OP has it right. Based on the experience of the 1980s once inflation begins to spiral upward it is hard to stop. Today's figure for producer prices for last year are up 9.7% for all of 2021 and much of that will continue to move through the system and into your retail prices. Also energy price increases have yet to be fully felt in end product prices. You have a price increase in Natural gas which has lead to a price increase in fertilizer for next springs planting which will work through the system to every food item on the shelves or in some cases empty shelves. Then there is lumber which started 2021 at $800/MBF and has soared up then down and now back up to $1200/MBF a 50% increase which will be felt in every building or repair project nationwide.
I expect the true inflation for 2022 to be North of ten percent.
One of my pet peeves is reports of inflation being X% but if you throw out food, rent, and energy it is only 0.5X%??
I got to tell yah that for most people after they pay the rent, buy the groceries, fill the car up and pay the electric and fuel oil bills there ain't much left to worry about inflated purchases with. :beer
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by David Jay »

Good thing none of us need Energy this time of year...
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Dusn »

Fat-Tailed Contagion wrote: Wed Jan 12, 2022 9:57 pm If you bought groceries in the last year.
If you bought gas in the last year.
If you bought a car in the last year.
If you bought a house in the last year.

You KNOW inflation isn’t 7%.

RENTs are up 50% year over year in our State where everyone seems to be migrating to - you could probably guess which State it is.
Our overall inflation was nearly zero based on our expense tracking. If everyone’s migrating to your state then that could be the problem. Obviously it’s going to vary and everyone will be different from the average, especially if you don’t own a home or need to buy a car this year, but 7% seems high to me.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by quantAndHold »

rob wrote: Wed Jan 12, 2022 9:59 pm It was zero if you didn't buy anything that went up.....
Because nobody buys food or needs to heat their houses or drive their cars.
Yes, I’m really that pedantic.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by z3r0c00l »

quantAndHold wrote: Thu Jan 13, 2022 10:38 am
rob wrote: Wed Jan 12, 2022 9:59 pm It was zero if you didn't buy anything that went up.....
Because nobody buys food or needs to heat their houses or drive their cars.
A large number of Americans have neither a car nor pay their own heat, a decent chunk of those 83% of Americans living in urban areas. Those who do own a car and a home always knew it would come with extra expenses, or should have known. For my money, $5.00 to drive 30 miles is still pretty reasonable especially factoring the environmental and economic burdens it places on the rest of us, even the ones who don't drive.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by vitaflo »

Inflation on assets like cars or homes goes both ways. It costs more to buy them, but it also increases the asset value if you already own them. My car is probably worth more than it was last year. My home certainly is. If I were to want to purchase a new home, the recent rise in prices matters little since my own home has increased in value the same amount to make up for it.

Consumables like food and energy are of course a different animal.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Whakamole »

Patzer wrote: Wed Jan 12, 2022 10:07 am Energy: 7.542% of the CPI-U rose 29.3% -> .07542*29.3= 2.21%
...
3. Deflation has started to creep into overpriced categories, i.e. December saw a 2.3% decline in beef prices, 2.1% decline in pork prices, 3.7% decline in TV prices, and a 4.4% decline in car rental prices.
There may be inflation in energy and deflation in TV and rental car prices, but I (either directly or though the products I use) consume energy. It's been years since I rented a car or bought a TV.

Meat on sale now costs about as much or more as meat off sale last year.
jebmke wrote: Wed Jan 12, 2022 10:38 am The local Royal Farms (gas mini-mart) used to have 4-6 clerks when it was busy. Now one person monitors self-checkout and takes care of the few who can't master the scan and go system or need/desire to pay cash. Their coffee machines are now grind & brew so they have no need to have someone constantly replacing and cleaning coffee urns.

Been a while since I was in Walmart but I recall there was one clerk for the whole store and an entire bank of scan and go self-checkout terminals.
Same at the local Kroger. There used to be a healthy number of checkout lines, which made self-checkout very quick. Now everyone is lined up for self-checkout because there are only a few registers open.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by HomerJ »

Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by David Jay »

I note that PPI (producer price index) is 9.7%, historically PPI is upstream (time wise) from CPI.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by muffins14 »

HomerJ wrote: Thu Jan 13, 2022 11:02 am
Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
Don’t go brining data and facts into this. Some prefer gut instinct
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by bberris »

One can always make statistics favorable by selecting out this or that, especially after the fact. As if no one purchases energy or cars.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by stocknoob4111 »

Shelter inflation says 4.1%, I wish that was reflective of what I am seeing on the ground in various cities - I am seeing closer to 10-20%
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Whakamole »

HomerJ wrote: Thu Jan 13, 2022 11:02 am Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
I don't think anyone in this thread is saying otherwise. From a purely "what is the rate of inflation now?" perspective, it doesn't matter whether it is caused by supply-chain issues or "printing press go brrr."

Supply-chain issues can run for years. For example, gaming consoles (PS5, XBox Series) have been hard to acquire soon after they came out, and moderate to high-end graphics cards used for desktop gaming have been in extremely short supply since before the pandemic started. My graphics card is a 2014 model.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Stoic9 »

Inflation, ah I pine for the good ole days of the double digits. Seriously, a key tenant of Bogle is planning. My plan, currently in the 5th year of a 30 year plan calls for average 3.5% inflation. As I complete year 5 (1/6th of my retirement) I'm still ahead on inflation. On the other hand I also plan a 8-10% per year raise on average. 2022 is looking at 8.37% but this may rise as a few tenants may leave. If a tenant leaves in 2022 the rent will increase 22% for new tenant, if they stay it will rise 4%. It seems that Bogle fall into two categories, those who have never 'felt' inflation and those who did!
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Morse Code »

HomerJ wrote: Thu Jan 13, 2022 11:02 am
Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
What do you think causes supply chain issues? Hint: increased demand.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Thesaints »

quisp65 wrote: Wed Jan 12, 2022 10:13 am Is 2021 inflation 4.7%? That the average of 12 months.
That would be an odd calculation. The fact that prices went up 3% from March 2020 to March 2021 does not help you in December 2021.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by Thesaints »

z3r0c00l wrote: Thu Jan 13, 2022 10:50 am A large number of Americans have neither a car nor pay their own heat,
It does sound rather surprising, given that there are more than 270 million privately owned vehicles in the US and only 330 million people, 70 million of whom are under the driving age.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by quisp65 »

Thesaints wrote: Thu Jan 13, 2022 4:56 pm
quisp65 wrote: Wed Jan 12, 2022 10:13 am Is 2021 inflation 4.7%? That the average of 12 months.
That would be an odd calculation. The fact that prices went up 3% from March 2020 to March 2021 does not help you in December 2021.
It was my first retirement cost of living raise and I ended up going off this. I did feel cheated averaging it.
https://www.bls.gov/data/inflation_calculator.htm
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by HomerJ »

Morse Code wrote: Thu Jan 13, 2022 2:27 pm
HomerJ wrote: Thu Jan 13, 2022 11:02 am
Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
What do you think causes supply chain issues? Hint: increased demand.
Is that the only thing? Think back to Econ 101... It's "Something and Demand"... What was the Something? A global pandemic and labor disruption has caused a problem, with, Something... Hint: Starts with a "S" I think. :)

(Both of us could be right you know - But the Germany example is important - Supply issues are world-wide)
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by steve r »

Jason Furman, Obama's chief economics advisor, wrote in the WSJ that he expects
"elevated inflation this year, possible even higher than in 2021."

https://www.wsj.com/articles/four-reaso ... _lead_pos5

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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by andypanda »

"A large number of Americans have neither a car nor pay their own heat,"

A larger number buy items that are delivered to the store by vehicles that use gas or diesel. You don't have to own a car to be affected by the jump in fuel oil prices. Container shipping has gone up and I believe rail prices have too.

I will admit that most children don't pay for their own heat and/or AC. Their parents however are either paying the utility company for heat or paying their landlord who pays the utility company. Same with residents of nursing homes. The heat is included in the monthly fee, but isn't free.
My stepson manages 700 rental units (and temporarily is covering an additional 400) and they do not provide so-called free heat out of the goodness of their heart. If anything the monthly rental charge per unit more than covers what the owner actually pays for heat. And rents have already increased substantially as mentioned in an earlier post.

Last week a frozen pizza cost me $5. It was a 2 for $10 sale. Regularly $5.59. My wife likes this brand so that's what we keep for a quick meal. This has been going on for 5 years or so. Two days ago at the same store - the only one within 8 miles - that exact same pizza was $6.99. I do most of the shopping - using her list - and there have been a lot of percentage jumps in this range.

Don't get me wrong, I'm not pinching pennies. I grab what I want and pay the bill without blinking. But I do tend to notice the 20% or 30% increases.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by z3r0c00l »

Fat-Tailed Contagion wrote: Wed Jan 12, 2022 9:57 pm If you bought groceries in the last year.
If you bought gas in the last year.
If you bought a car in the last year.
If you bought a house in the last year.

You KNOW inflation isn’t 7%.

RENTs are up 50% year over year in our State where everyone seems to be migrating to - you could probably guess which State it is.
Your regional issues are not typical of the entire country. For example, in my part of the world fully 50% of apartments are rent stabilized meaning they can only go up 1-3% in a typical year. Rents did go up on the free market significantly last year, but only to return to their pre-pandemic levels. I believe that is called base effect. It is inflation in a sense, but back to normal isn't really something to complain about.

The conspiracy theory that the government is hiding inflation through fake numbers has been debunked. If you want cheaper rent move to a state that isn't the flash-in-the-pan fad of the moment. Or just stay there another few years and property values are likely to crash as they did in Vegas and Miami during the GR.
Last edited by z3r0c00l on Fri Jan 14, 2022 9:43 am, edited 2 times in total.
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by MBB_Boy »

HomerJ wrote: Thu Jan 13, 2022 11:02 am
Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
Pretty sure they did, just in a different form. Weren't they directly paying businesses in order to keep people employed, along with other measures? The U.S. is definitely not the only country that opened the checkbook in an effort to stave off recession, we just took a different approach
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by MBB_Boy »

muffins14 wrote: Thu Jan 13, 2022 11:15 am
HomerJ wrote: Thu Jan 13, 2022 11:02 am
Morse Code wrote: Thu Jan 13, 2022 7:01 am We always say here no one can predict the future, but nearly everyone I know predicted higher inflation when the government started handing out money hand over fist for nothing almost two years ago. Even a fifth grader knows when you give something away for nothing it loses value. :oops:
Then why is inflation also up in Germany which didn't hand out "money hand over fist"?

Supply-chain issues are probably the bigger culprit since inflation is up all over the world, not just in the U.S.
Don’t go brining data and facts into this. Some prefer gut instinct
Especially when those data and facts are wrong. Germany absolutely passed a stimulus package, including direct payments to families with children. The amount of spend and the way they approached was different, but they (and many others) had a government response that included stimulus
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Re: December CPI-U Review - 2021 Inflation was only 3.63% if you exclude energy and car purchases

Post by trueblueky »

CPI is shown both with and without energy and food because those components are so volatile. From 2018 to 2020, the average price for the year of a gallon of gas dropped 55 cents nationwide. This was covid-related as the number of miles driven plunged (my auto insurance company even gave us a rebate in 2019 for that reason). Did anyone expect that, once people returned to work, gas prices would remain that low?

Volatility in food prices went something like this, as I recall from rural childhood:
* something happens that depresses the corn harvest (too much rain, too little rain, etc.)
* corn prices jump
* some beef farmers cannot make a profit at those prices, so they reduce their herd size
* that supply makes beef prices go down and reduces demand for corn
* a year later, the smaller herds make beef prices increase
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