Never swallow COLA

Peter Grant supplies a data point:

[E]ven five years ago we could eat out as a couple in a “normal” restaurant (pizzeria, meat-and-three, burger joint, the local Thai eatery, whatever) for about $20-$30 for the two of us. Today, we’re lucky to get away with less than $40 for the same meal, and it’s frequently close to (or even over) $50. Auto tires? The last tires I bought for my pickup truck cost me less than $130 each, which I thought was expensive, even though they were a premium brand and I bought them from a vendor known for low prices. Today, just four years after I bought them, you can make that $200 per tire from the same vendor. That’s an increase of about $70 per tire in four years, or an average of $17.50 per year.

The Consumer Price Index? Don’t make me laugh:

In 2016 I did a detailed two-part study of inflation, which highlighted the problem, looked at the alternate inflation figures provided by Chapwood and Shadowstats, and described the reality of our current position. If you didn’t read them then, or don’t recall them, I strongly urge you to do so. They’re brutally factual. I defy anyone to contradict the points I made there, because they’re all based on reality and on actual evidence — not government meddling. I pointed out, in the second article:

“Our incomes are being reduced in purchasing power by approximately 10% per year (the real rate of inflation, as discussed yesterday). If I earn $50,000 per year, and receive a 1% increase this year to compensate me for the official rate of inflation, this is worse than meaningless. In reality I will suffer a 9% decrease in my purchasing power. Next year, my income of $50,500 (including the previous year’s 1% increase) will be worth only $45,450 in terms of this year’s purchasing power. That decline will continue, year in, year out. I have to plan accordingly, and expect that my money will buy less and less as time passes. Unless I can somehow find extra money from somewhere, I’m going to be in serious financial difficulties in due course. (Many people already are.)”

The Chapwood index is based on the actual selling price of a basket of 500 products in Americs’s largest cities. According to Chapwood, here in OKC, prices have been going up about 9 percent a year for the last five years. The CPI, ostensibly a nationwide index, reflects the actual rate of inflation in no nation on the planet.

5 comments

  1. fillyjonk »

    4 April 2018 · 3:03 pm

    That official inflation index is a gamed system. I’ve definitely noticed a steady uptick in what I pay for groceries, despite not having changed how I eat in the past 5 years or so. 10% decline seems to be reasonable.

    I admit I’ve asked myself on occasion: does it make more sense to contribute to your retirement plan, or to buy 45 years worth of toilet paper, paper towels, and other things unlikely to perish in that time? Because maybe by the time I retire, toilet paper will be worth more than the money I’ve saved.

  2. McGehee »

    4 April 2018 · 3:47 pm

    A few years ago it was noticed that recurrent necessary expenses — food, energy, etc. — weren’t being included in the official inflation trackers. There was a rationale, but it wasn’t very rational.

  3. CGHill »

    4 April 2018 · 6:08 pm

    Those prices were, they said, “volatile”: subject to rapid changes.

    All together now: DUH.

  4. McGehee »

    4 April 2018 · 6:25 pm

    Any trend can be plotted regardless of amplitude — unless it’s politically expedient not to.

  5. April rambling: Silent Scream | Ramblin' with Roger »

    15 April 2018 · 8:15 am

    […] The REAL Consumer Price Index? […]

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