Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what's the point" around white collar work has never been more intense.
Here are some N-year rolling total inflation charts to put this datapoint in a longer-term perspective: https://totalrealreturns.com/inflation . Zooming out always smooths the noise.
> Prices are up +4.25% in the past year, and +24.49% in the past 5 years, according to the latest CPI data released Jun. 10, 2026. The price level has approximately doubled (2.01x) today compared to August 1999.
Not knowing if that's good/bad, as it is without any frame of reference, so the same data for Spain looks something like this:
Prices up +3.2% in the past year, up +22.4% in the past 5 years. Compared to 1999, a 1.88× difference, and if you want to compare since when it doubled, it'd be around September 1996. This is according to a tool from INE, Spain’s national statistics: https://www.ine.es/varipc/index.do?L=1
Can you really say that based only on the inflation? What if wages increased 6%, then 3% inflation wouldn't be as bad as if inflation raised 2% but wages only increased 0.1%? At least if you think about purchasing power I suppose. But won't claim to be an expert on this, happy to be educated by those who are :)
Inflation isnt as simple as good/bad. Monetary theory shows us that short term inflation is a good way to counteract spikes in unemployment. Whether you prefer stable inflation with swings in unemployment or stable unemployment with swings in inflation or something in between is a political question.
That shows that it’s been since 1991 since we saw similar five year increases in prices. Which is a long time. You also have to be careful not to zoom out so far you get into the “we all die anyway” scale where you’re not really tracking things that are meaningful to on-the-ground, as-lived reality
1918 isn't very relevant to modern living. And nobody wants to go back to the stagflation of the 1970s. And that scale is logarithmic.
Graph it without the logarithmic scale and draw a curve through the 1982-2018 data and the recent spike will explain why people are complaining about it.
Indeed. Back then food and shelter comprised a much larger % of the average income, and so each percentage point of inflation was considerably more painful than it is now.
I am not sure what the perspective is: we aren't the same economy (there are true financial system differences between now and say, 1985) and, even if we were the same, the three other shocks that rise like this are two world wars and an oil crisis. This is some dunderding old narcissist thinking he's the toughest kid on the block. You could argue the oil crisis was a similar result of the US never, ever learning a lesson about intervening in others' political systems (especially if there's oil involved), but trend line or not, no one had to go through this.
And the trend line would bend differently if we could just learn the lesson.
And yes I am oversimplifying: the current conditions are actually do to a number of stupid things the current administration did because they assumed everyone who came before them was stupid and woke, but this just strikes me wrong, as though the chart should be comfort to someone struggling to make rent or pay for medicine or what have you. Much of this could have been avoided.
Typically, you need a little more to make up for the difference in how much more taxes you pay at the marginal end vs the average for your total income...
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.
Much more since the numbers are cooked anyways. Car model N cost 10k, and car model N+1 costs 15k, if N+1 has 2 more airbags, one more gear, a keyless starter it will be counted way under 50% inflation, even though you pay 50% more.
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
They're not necessarily "cooked," (but they certainly can be). Inflation is genuinely hard to calculate since it's different for everyone, goods and services purchased drift over time, and as you mentioned, that exact good also changes over time. CPI (and others) are more useful in a MoM or YoY context. At 10 years, it's better viewed as best guess cost of typical living rather than an economic indicator comparing apples and oranges.
> housing
This is actually the hardest to get right because it's the largest, and 2/3 of Americans own homes, so part of their costs are fixed.
No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy a phone for $10 even if todays phone's are 200x better.
Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the question "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?" It assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent.
Not necessarily, depends on the distribution of your own expenses. If you deviate from the average urban household (lets say, you have a particularly long commute or your car isn't as fuel efficient as the average. Look at the increase on fuel prices, 40.5%!).
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
>> If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
This is the problem with people treat CPI as some word from the heavens...it is not. CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor of what the inflation is. Anyone living in the real world knows experienced inflation is way higher.
> CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor
It’s an attempt at a central tendency in a complex economy with non-linear variability.
> Anyone living in the real world knows experienced inflation is way higher
Here is a map of wage changes across the U.S., 2024 to 2025 [1]. Lots of variance! If you’re on the West Coast, right now, you’re seeing above-CPI inflation. If you’re in the Northern Rockies, where I am, you’re seeing less.
A conversation with your boss about a COLA raise really shouldn't include your own personal finances. "I just bought a house" is not a good reason for a raise; "prices in our area have increased" is a much better one
True, but how inflation affects each person is different. This isn't a good measure, but it is the best we have, and usually close enough to the truth.
CPI and PCE are great national statistics. I’m saying if you’re acting on a sub-national scale, there are better figures, though none as good as the one you compile for yourself. (Feeding bills and statements into an LLM should be a way to do this. Though, to be clear, I don’t do this.)
I've known a few people who lost everything when the company went bankrupt. (most died of old age when I was a kid - before pension reform companies often did put your retirement in the company stocks)
In most cases, you are granted a notional dollar amount that turns into a concrete and fixed number of shares that then vest over the next 4 years.
Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years.
If you are paid in cash, you will be buying fewer shares per dollar (and per year) rather than getting the same number.
How is it inaccurate? If I only care about buying apples, and apples get 10% more expensive, and my salary only increases by 5%, then I can't buy as many apples as I could have before. How many apples I do actually buy in the end is irrelevant to the calculation.
The person you're replying to erroneously interpreted "stay even" as "avoid going into debt," instead of your income's purchasing power remaining constant.
Up 4.2% (2.9% core, i.e. stripping out food and energy) over the last 12 months before seasonal adjustment.
The higher-frequency data are more concerning. CPI “increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April” and 0.9 percent in March [1]. (0.3, 0.2, 0.3 percent for December, January, February, respectively.)
So a linear trend of 6% from March, closer to 9% if one extrapolates the March-April-May quarter. Almost all of that driven by food and energy. Core spiked to 0.4% MoM in April, but calmed down to 0.2% in May, on trend with pre-war numbers. It’s up 2.9% YoY, but trending a bit lower. (Looked at another way, we’ve already “booked” 2.5% of inflation for ‘26. If we continue at 0.5% MoM, we close the year +5.6%. Even if it drops to pre-war 0.2%, we’re still going to be +3.8%. Given the resumption of hostilities, I’m betting we’ll be closer to the former.)
Together with the jobs numbers, it would be weird for an independent Fed to not raise rates.
Prices have doubled since 1999!? Restaurant prices near me have doubled since 2015, easily. And that's not counting delivery going from free to 25% of the meal cost.
Not quite. The value of the currency has declined by 33% since 1999.
Prices are subject to the combination of the value of the currency and the value of the good. Food may be worth more than in the past, for example, so you cannot look at the value of the currency alone.
Value is always relative. Typically currency is what we use as the relative point of comparison, but obviously you cannot compare the value of the currency with the value of the currency. Hence why we flip things around. A bag of goods, as opposed to a single item, filters out the noise of each individual good changing in value independently.
Quite the opposite. Value is essentially a function of scarcity relative to desire. Food desire may be, for all intents and purposes, stable, but availability is most certainly not. Something like a major weather event wiping out a crop can quickly change the scarcity profile. Food is especially prone to value variances over time.
It's more the messenger than the message. Or in this case the people funding and staffing the messenger, and who desperately need this number to be as low as possible.
Not so much THIS report, but you can't trust any data that the Trump administration puts out after all the blantant corruption. Remember the Sharpie on the hurricane chart?
Remember this is the number the Government is measuring and reporting. The "real" inflation that every day people feel in their wallet is significantly higher.
Because people can’t internalize regional variance. So since the beginning of time, it’s not noticed when the national number is higher and fraud when it’s lower.
Americans spend a significant portion of their income on food and fuel, which are excluded. Historically, these together accounted for about 15% of their income, probably up to 20% after recent price increases.
Because they basically pick and choose what's in there.
If you sat down and did the math on what it costs someone to pay rent / mortgage, car insurance, health insurance, daycare, schooling, going out to eat and drink, doing anything for entertainment, go to the grocery store.. it's not a debate that the real inflation is significantly higher all the time than what is used to measure the number.
But if you look at the sibling comment, all of that came from "Food away from home ". In other words, it's all because of takeout/restaurants, not groceries. Those were actually dragging inflation down.
Some businesses use that as cover to increase prices even when their costs may not have actually been affected by the price of energy. Never waste an opportunity to put the big squeeze on.
Steadily rising prices will be the norm from now on. What will be interesting to see is how fast the corporate elite figure they can boil the frogs without them noticing too much.
Is this of any significance? I would imagine most people are like me: we shop based on quality and price and where we want something on that curve. Whether someone raises the price on me “because of inflation” or “because we want to make more money” is indistinguishable.
A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive without pricing it that high won’t get me to buy it. If I do want to buy something for a price, explaining that a guy is charging a hefty profit won’t get me to not buy it.
The only thing that will get me to buy it or not buy it is if it is at the point on the price/quality frontier where I want it.
This cannot be emphasized enough. The rise in egg prices was such a thing. Avian flu was an impact, but not to the degree that egg prices increased. Those producers are reporting record profits.
Worse is coming and the markets seem to be in complete denial about it.
Oil has only really maintained the ~$100/barrel price because of record SPR releases worldwide. Also, that $100 price is kinda fake because it's a future price. The spot prices got much higher. Well, that runway is coming to an end. If the Strait of Hormuz re-opened today , we'd still be facing an energy shock. Plus there's famine coming.
Now the US won't run out of oil or refined petroleum products. The uS is now a net exporter. But it's a global marekt so the prices are going to go way up. And some countries and heavily dependent on oil for electricity. They are going to face blackouts.
So even though fertilizer shortages are skewed towards the Global South, food prices too are global so they're going up too.
In 1973, the energy shock took ~6 months to manifest [1].
But I think the real problem is dynamic pricing. Inflation is insidious. People start raising prices on the expectation of rising prices, thus causing prices to rise. But so many industries now are going well beyond that by essentially colluding through AI tools (eg RealPage) to further raise prices.
I honestly don't know how this ends without a deep, long recession.
U.S. consumer wages index down -1% this past three months. also. We almost briefly started climbing positive in January, but nope, another 1% drop, sigh.
See also the +25% inflation / -1.2% net wages after inflation over five years chart here, for those unfamiliar with how inflation % press releases are misleading over time. If household spending power is -1% after +4% inflation, then that inflation probably isn’t healthy for your country’s economic future, etc.
(I also suspect the wage index itself is disguising about the total wages paid index dropping like a stone, but haven’t done the math to chart it yet myself yet.)
The Iran war is for sure a huge part of that (just look at the energy cost inflation!), but other elements are a factor too. "Months ago" is really not that long when it comes to inflation.
The Iran conflict will continue on a low flame (occasional pinpricks like now) forever.
It serves the US Energy Dominance Agenda against China, Japan, India and the EU.
The Trump administration does not care about "its" population. There were already rumors early in the Trump term that Trump would not mind a recession so that his real estate cronies could buy cheap foreclosures.
So it is all a double win for the oligarchs. The stock market is still fine, nothing else matters.
That is ascribing far too much strategic thinking to this administration. They're just not capable of the kind of planning and foresight that would require.
The administration's planning is much more along the lines of, Will this look cool when they announce it on Fox News tomorrow? If you think there's much beyond that, you're ascribing strategic clarity where there isn't any. They're continue to flail around and TACO until they have a result they can present to MAGA loyalists as a success, regardless of actual merits.
It's not a question of ethics. It's a question of competence.
That doesn’t make sense. In the medium term this will strengthen efforts in China, Japan, India and the EU to move away from fossil fuel dependence much more quickly.
If this ends up being the case, 15 years from now we might look back at this as the catalyst for supercharging the energy transition across the world ex-US.
I can believe the US/UK oil companies believe that.
It may even be true, because the energy transition caps the entire future opportunity for oil/gas sales, and all the producers have been trying to capture a larger share of that pied for the last 2 years or so.
But this intervention is so heavy-handed that it is visibly destroying that future market. It looks like all oil companies will lose a lot because of it, US/UK ones included.
> The Trump administration does not care about "its" population.
Yes, he's trying to govern like an oligarch. We will see in November if this was a good choice or if the US is still too democratic for this to work. Or earlier if he tries to avoid that test.
Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what's the point" around white collar work has never been more intense.
Are you assuming yearly wages not increasing to match/exceed inflation every year?
The logical point here doesn't make much sense to me otherwise.
Cumulative inflation since 2019 has been 30%. More with this new numbers, I think.
What jobs have the wages gone up 30% in that same time period? I’m sure a few, but not many.
Here are some N-year rolling total inflation charts to put this datapoint in a longer-term perspective: https://totalrealreturns.com/inflation . Zooming out always smooths the noise.
> Prices are up +4.25% in the past year, and +24.49% in the past 5 years, according to the latest CPI data released Jun. 10, 2026. The price level has approximately doubled (2.01x) today compared to August 1999.
Not knowing if that's good/bad, as it is without any frame of reference, so the same data for Spain looks something like this:
Prices up +3.2% in the past year, up +22.4% in the past 5 years. Compared to 1999, a 1.88× difference, and if you want to compare since when it doubled, it'd be around September 1996. This is according to a tool from INE, Spain’s national statistics: https://www.ine.es/varipc/index.do?L=1
2% is good, anything over 3% is not good, anything over 4% is bad, 5% and higher is really bad. Hope that clears things up for you.
Can you really say that based only on the inflation? What if wages increased 6%, then 3% inflation wouldn't be as bad as if inflation raised 2% but wages only increased 0.1%? At least if you think about purchasing power I suppose. But won't claim to be an expert on this, happy to be educated by those who are :)
The FED says that 2% is good. 2% is not good. Their target of 2% per year means we have 2% compounding annually devaluation of our currency.
Why those arbitrary thresholds?
Inflation isnt as simple as good/bad. Monetary theory shows us that short term inflation is a good way to counteract spikes in unemployment. Whether you prefer stable inflation with swings in unemployment or stable unemployment with swings in inflation or something in between is a political question.
Which puts central banks in a hard place right now because the problem is supply-side. The dual mandate is a lose-lose situation.
That shows that it’s been since 1991 since we saw similar five year increases in prices. Which is a long time. You also have to be careful not to zoom out so far you get into the “we all die anyway” scale where you’re not really tracking things that are meaningful to on-the-ground, as-lived reality
1918 isn't very relevant to modern living. And nobody wants to go back to the stagflation of the 1970s. And that scale is logarithmic.
Graph it without the logarithmic scale and draw a curve through the 1982-2018 data and the recent spike will explain why people are complaining about it.
Indeed. Back then food and shelter comprised a much larger % of the average income, and so each percentage point of inflation was considerably more painful than it is now.
Noise is a lot better when it's centered around 0.
I am not sure what the perspective is: we aren't the same economy (there are true financial system differences between now and say, 1985) and, even if we were the same, the three other shocks that rise like this are two world wars and an oil crisis. This is some dunderding old narcissist thinking he's the toughest kid on the block. You could argue the oil crisis was a similar result of the US never, ever learning a lesson about intervening in others' political systems (especially if there's oil involved), but trend line or not, no one had to go through this.
And the trend line would bend differently if we could just learn the lesson.
And yes I am oversimplifying: the current conditions are actually do to a number of stupid things the current administration did because they assumed everyone who came before them was stupid and woke, but this just strikes me wrong, as though the chart should be comfort to someone struggling to make rent or pay for medicine or what have you. Much of this could have been avoided.
The "stupid and woke" thing is just marketing, they know exactly what they're doing.
Do understand actual policy decisions: https://www.richmondfed.org/publications/research/econ_focus...
Simple, excellent data. Thanks.
This is so good Ty.
Basically, looking at inflation over time, we look pretty good here.
Remember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.
Typically, you need a little more to make up for the difference in how much more taxes you pay at the marginal end vs the average for your total income...
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
Tax brackets are also inflation-adjusted, so shouldn't that cancel out?
No it pushes you into a higher tax bracket earlier so also acts as a tax increase
It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.
Much more since the numbers are cooked anyways. Car model N cost 10k, and car model N+1 costs 15k, if N+1 has 2 more airbags, one more gear, a keyless starter it will be counted way under 50% inflation, even though you pay 50% more.
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
They're not necessarily "cooked," (but they certainly can be). Inflation is genuinely hard to calculate since it's different for everyone, goods and services purchased drift over time, and as you mentioned, that exact good also changes over time. CPI (and others) are more useful in a MoM or YoY context. At 10 years, it's better viewed as best guess cost of typical living rather than an economic indicator comparing apples and oranges.
> housing
This is actually the hardest to get right because it's the largest, and 2/3 of Americans own homes, so part of their costs are fixed.
No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy a phone for $10 even if todays phone's are 200x better.
Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the question "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?" It assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent.
Not necessarily, depends on the distribution of your own expenses. If you deviate from the average urban household (lets say, you have a particularly long commute or your car isn't as fuel efficient as the average. Look at the increase on fuel prices, 40.5%!).
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
>> If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
This is the problem with people treat CPI as some word from the heavens...it is not. CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor of what the inflation is. Anyone living in the real world knows experienced inflation is way higher.
> CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor
It’s an attempt at a central tendency in a complex economy with non-linear variability.
> Anyone living in the real world knows experienced inflation is way higher
Here is a map of wage changes across the U.S., 2024 to 2025 [1]. Lots of variance! If you’re on the West Coast, right now, you’re seeing above-CPI inflation. If you’re in the Northern Rockies, where I am, you’re seeing less.
[1] https://www.bls.gov/charts/county-employment-and-wages/perce...
Don’t forget the obvious ‘finger on the scale’ influence from the administration too.
Why can't we just water down the gasoline? /s
That's what E15 is for.
> 4.2% is what you need to stay even
On average, nationally. Look up your state or metropolitan-area CPI. Or better yet, track your actual expenses and project forward.
A conversation with your boss about a COLA raise really shouldn't include your own personal finances. "I just bought a house" is not a good reason for a raise; "prices in our area have increased" is a much better one
True, but how inflation affects each person is different. This isn't a good measure, but it is the best we have, and usually close enough to the truth.
I agree it’s not a perfect measure, but I conclude “it is the best we have, and usually close enough to the truth” makes it a good measure.
> This isn't a good measure
CPI and PCE are great national statistics. I’m saying if you’re acting on a sub-national scale, there are better figures, though none as good as the one you compile for yourself. (Feeding bills and statements into an LLM should be a way to do this. Though, to be clear, I don’t do this.)
This is why it's important to get paid in stock. I get an automatic extra 100k a year if inflation runs hot!
I've known a few people who lost everything when the company went bankrupt. (most died of old age when I was a kid - before pension reform companies often did put your retirement in the company stocks)
What advantages does that have over taking your paycheck 100% in cash and investing in index funds?
In most cases, you are granted a notional dollar amount that turns into a concrete and fixed number of shares that then vest over the next 4 years.
Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years.
If you are paid in cash, you will be buying fewer shares per dollar (and per year) rather than getting the same number.
If inflation due to energy costs is running hot they’ll have to raise rates which will cause stock prices to fall.
Also, any asset that isn’t appreciating at least 4.2% is losing value.
Ah…inflation.
And you're still taxed on the "gain"
Many people here make more than they spend, and this is simply inaccurate when that's the case.
How is it inaccurate? If I only care about buying apples, and apples get 10% more expensive, and my salary only increases by 5%, then I can't buy as many apples as I could have before. How many apples I do actually buy in the end is irrelevant to the calculation.
The person you're replying to erroneously interpreted "stay even" as "avoid going into debt," instead of your income's purchasing power remaining constant.
No, it's like, if you could buy 100 things before, but you can only buy 96 things now, then you have accumulated less value :D
I disagree. "Money" has many meanings, absolute and relative.
Receiving "market" compensation trumps real-world expenses, since the market for one's labor is a different market than the real-world expenses.
It's still a cut in purchasing power even if you aren't hurting.
But if you don't mind, I'll take 4.2% from your pay.
No. What isn't spent now is future spending. You are still getting less.
Up 4.2% (2.9% core, i.e. stripping out food and energy) over the last 12 months before seasonal adjustment.
The higher-frequency data are more concerning. CPI “increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April” and 0.9 percent in March [1]. (0.3, 0.2, 0.3 percent for December, January, February, respectively.)
So a linear trend of 6% from March, closer to 9% if one extrapolates the March-April-May quarter. Almost all of that driven by food and energy. Core spiked to 0.4% MoM in April, but calmed down to 0.2% in May, on trend with pre-war numbers. It’s up 2.9% YoY, but trending a bit lower. (Looked at another way, we’ve already “booked” 2.5% of inflation for ‘26. If we continue at 0.5% MoM, we close the year +5.6%. Even if it drops to pre-war 0.2%, we’re still going to be +3.8%. Given the resumption of hostilities, I’m betting we’ll be closer to the former.)
Together with the jobs numbers, it would be weird for an independent Fed to not raise rates.
[1] https://www.bls.gov/news.release/cpi.nr0.htm
Prices have doubled since 1999!? Restaurant prices near me have doubled since 2015, easily. And that's not counting delivery going from free to 25% of the meal cost.
Yes restaurant prices have increased more but other things have increased less. For example entertainment, clothing, electronics, even automobiles.
Not quite. The value of the currency has declined by 33% since 1999.
Prices are subject to the combination of the value of the currency and the value of the good. Food may be worth more than in the past, for example, so you cannot look at the value of the currency alone.
The value of the currency relative to an evolving bag of reference goods.
Value is always relative. Typically currency is what we use as the relative point of comparison, but obviously you cannot compare the value of the currency with the value of the currency. Hence why we flip things around. A bag of goods, as opposed to a single item, filters out the noise of each individual good changing in value independently.
Food is one of the things that's going to have the least change in value.
Quite the opposite. Value is essentially a function of scarcity relative to desire. Food desire may be, for all intents and purposes, stable, but availability is most certainly not. Something like a major weather event wiping out a crop can quickly change the scarcity profile. Food is especially prone to value variances over time.
It's CPI, they'll just keep changing the basket of goods until the numbers look like they want them to.
"Well, inflation since 2015 is nonexistent if you swap out steaks for 3 day old catfish and fruits for kool aid packets"
The worst part of this report is my diminished faith in the numbers.
Could you explain? What about this report pushes you toward not believing the numbers?
It's more the messenger than the message. Or in this case the people funding and staffing the messenger, and who desperately need this number to be as low as possible.
It’s not this report specifically but the other stuff the admin has done with the BLS.
Not so much THIS report, but you can't trust any data that the Trump administration puts out after all the blantant corruption. Remember the Sharpie on the hurricane chart?
Remember this is the number the Government is measuring and reporting. The "real" inflation that every day people feel in their wallet is significantly higher.
Why is the government measured inflation not the same as real inflation?
Because people can’t internalize regional variance. So since the beginning of time, it’s not noticed when the national number is higher and fraud when it’s lower.
Ah, you're right. A broad, contrarian dismissal is exactly the way you should respond in any conversation related to CPI/inflation.
By the way, that coffee is $9. Sorry, Brazil tariffs and everything else - you understand.
Americans spend a significant portion of their income on food and fuel, which are excluded. Historically, these together accounted for about 15% of their income, probably up to 20% after recent price increases.
They are not excluded from CPI. You may be thinking of “core” inflation but the baseline CPI includes those.
Because they basically pick and choose what's in there.
If you sat down and did the math on what it costs someone to pay rent / mortgage, car insurance, health insurance, daycare, schooling, going out to eat and drink, doing anything for entertainment, go to the grocery store.. it's not a debate that the real inflation is significantly higher all the time than what is used to measure the number.
All of the increase is from energy. Oil prices.
For your interpretation:
All items: +0.5% monthly; +4.2% year-over-year.
Energy: +3.9% monthly; +23.5% year-over-year.
Gasoline: +7.0% monthly; +40.5% year-over-year.
Fuel oil: +58.9% year-over-year.
Electricity: +0.6% monthly; +5.9% year-over-year.
Utility natural gas: -0.5% monthly; +3.0% year-over-year.
Food overall: +0.2% monthly; +3.1% year-over-year.
Food at home / groceries: +0.1% monthly.
Food away from home / restaurants: +0.3% monthly.
Nonalcoholic beverages: +0.6% monthly.
Cereals and bakery products: +0.4% monthly.
Fruits and vegetables: +0.2% monthly.
Dairy: -0.6% monthly.
Meats, poultry, fish, and eggs: -0.2% monthly.
Core CPI / all items less food and energy: +0.2% monthly; +2.9% year-over-year.
Shelter overall: +0.3% monthly.
Rent: +0.4% monthly.
Owners’ equivalent rent: +0.3% monthly.
Lodging away from home: +0.4% monthly.
Communication: +1.3% monthly.
Airline fares: +2.7% monthly.
Personal care: +1.0% monthly.
Recreation: +0.3% monthly.
Apparel: +0.3% monthly.
Used cars and trucks: +0.1% monthly.
Medical care: +0.3% monthly.
Hospital services: +0.7% monthly.
Motor vehicle insurance: -1.7% monthly.
Household furnishings and operations: -0.6% monthly.
New vehicles: -0.3% monthly.
Prescription drugs: -0.9% monthly.
At least raw milk is getting cheaper
Na, the hospital/medical care that comes along with it has gone up.
And eggs! Don't forget about the eggs!
Per the link, food is up 3.1% and everything else 2.9%. So energy pulled inflation up from about 3% to about 4%, but that's not "all of the increase"
>Per the link, food is up 3.1%
But if you look at the sibling comment, all of that came from "Food away from home ". In other words, it's all because of takeout/restaurants, not groceries. Those were actually dragging inflation down.
How much of the food cost (and everything else) is tied to the increase in diesel prices? Do they adjust that out?
Energy going up drives evrything up, including food. Everything we do depends on energy in many different ways.
It's possible for energy to be behind the rises in other cost, but the data presented here gives no evidence for or against that possibility.
It's not just due to energy, at least not directly. Core CPI (ex-food and energy) has been increasing monotonically since February:
https://fred.stlouisfed.org/series/CPILFENS#
Some businesses use that as cover to increase prices even when their costs may not have actually been affected by the price of energy. Never waste an opportunity to put the big squeeze on.
Steadily rising prices will be the norm from now on. What will be interesting to see is how fast the corporate elite figure they can boil the frogs without them noticing too much.
$50.00 hotdog is coming.
Is this of any significance? I would imagine most people are like me: we shop based on quality and price and where we want something on that curve. Whether someone raises the price on me “because of inflation” or “because we want to make more money” is indistinguishable.
A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive without pricing it that high won’t get me to buy it. If I do want to buy something for a price, explaining that a guy is charging a hefty profit won’t get me to not buy it.
The only thing that will get me to buy it or not buy it is if it is at the point on the price/quality frontier where I want it.
This cannot be emphasized enough. The rise in egg prices was such a thing. Avian flu was an impact, but not to the degree that egg prices increased. Those producers are reporting record profits.
Is this with the new method of counting what inflation means? (trimmed mean, without outliers)
No, the new method of inflation that Kevin Warsh likes is the trimmed mean which is 2.8%.
Worse is coming and the markets seem to be in complete denial about it.
Oil has only really maintained the ~$100/barrel price because of record SPR releases worldwide. Also, that $100 price is kinda fake because it's a future price. The spot prices got much higher. Well, that runway is coming to an end. If the Strait of Hormuz re-opened today , we'd still be facing an energy shock. Plus there's famine coming.
Now the US won't run out of oil or refined petroleum products. The uS is now a net exporter. But it's a global marekt so the prices are going to go way up. And some countries and heavily dependent on oil for electricity. They are going to face blackouts.
So even though fertilizer shortages are skewed towards the Global South, food prices too are global so they're going up too.
In 1973, the energy shock took ~6 months to manifest [1].
But I think the real problem is dynamic pricing. Inflation is insidious. People start raising prices on the expectation of rising prices, thus causing prices to rise. But so many industries now are going well beyond that by essentially colluding through AI tools (eg RealPage) to further raise prices.
I honestly don't know how this ends without a deep, long recession.
[1]: https://paulkrugman.substack.com/p/oil-crises-past-and-possi...
U.S. consumer wages index down -1% this past three months. also. We almost briefly started climbing positive in January, but nope, another 1% drop, sigh.
See also the +25% inflation / -1.2% net wages after inflation over five years chart here, for those unfamiliar with how inflation % press releases are misleading over time. If household spending power is -1% after +4% inflation, then that inflation probably isn’t healthy for your country’s economic future, etc.
https://www.statista.com/chart/32428/inflation-and-wage-grow...
(I also suspect the wage index itself is disguising about the total wages paid index dropping like a stone, but haven’t done the math to chart it yet myself yet.)
Regressive consumer tax due to tariffs?
Regressive consumer tax due to going to war with a country for no real reason
Shipping container rates were starting to stabilize, but the issues with the Straight have caused a 80%+ increase in the last few months.
https://www.drewry.co.uk/supply-chain-advisors/supply-chain-...
[delayed]
And gas prices
That was months ago. These days it's more likely to be from the Iran war and the Strait of Hormuz being closed, and what that did to energy prices.
The Iran war is for sure a huge part of that (just look at the energy cost inflation!), but other elements are a factor too. "Months ago" is really not that long when it comes to inflation.
The Iran conflict will continue on a low flame (occasional pinpricks like now) forever.
It serves the US Energy Dominance Agenda against China, Japan, India and the EU.
The Trump administration does not care about "its" population. There were already rumors early in the Trump term that Trump would not mind a recession so that his real estate cronies could buy cheap foreclosures.
So it is all a double win for the oligarchs. The stock market is still fine, nothing else matters.
That is ascribing far too much strategic thinking to this administration. They're just not capable of the kind of planning and foresight that would require.
The administration's planning is much more along the lines of, Will this look cool when they announce it on Fox News tomorrow? If you think there's much beyond that, you're ascribing strategic clarity where there isn't any. They're continue to flail around and TACO until they have a result they can present to MAGA loyalists as a success, regardless of actual merits.
It's not a question of ethics. It's a question of competence.
That doesn’t make sense. In the medium term this will strengthen efforts in China, Japan, India and the EU to move away from fossil fuel dependence much more quickly.
If this ends up being the case, 15 years from now we might look back at this as the catalyst for supercharging the energy transition across the world ex-US.
Might be wishful thinking, but I see this as the silver lining of the conflict
> I see this as the silver lining of the conflict
From what I can tell it’s also supercharging coal, particularly in Asia, e.g. India investing in coal gasification infrastructure [1].
[1] https://www.reuters.com/business/energy/india-clears-4-billi...
> It serves the US Energy Dominance Agenda against China, Japan, India and the EU
…how? What is this agenda? Juicing short-term energy exports? That’s not a “dominance agenda.”
> It serves the US Energy Dominance Agenda
I can believe the US/UK oil companies believe that.
It may even be true, because the energy transition caps the entire future opportunity for oil/gas sales, and all the producers have been trying to capture a larger share of that pied for the last 2 years or so.
But this intervention is so heavy-handed that it is visibly destroying that future market. It looks like all oil companies will lose a lot because of it, US/UK ones included.
> The Trump administration does not care about "its" population.
Yes, he's trying to govern like an oligarch. We will see in November if this was a good choice or if the US is still too democratic for this to work. Or earlier if he tries to avoid that test.
Absolutely hard Agree here. Thank you.
Thanks, Obama.