Inflation/Price Increase

Started by Dry Brett Kavanaugh, November 29, 2021, 12:02:30 PM

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Dry Brett Kavanaugh

The consumer price increased by more than 5 percent in the last 12 months. Several economists forecast similar level of inflation until the end of 2022. I guess you can buy bunch of music recordings now and tell your family members that you are saving money.  ;D

The entire price increase in the two years, including the next year, would be around 10% (1.05 x 1.05=1.1). This means that our real income decrease by 10% in the two years. Do you have any plan or strategy to tackle this inflation/decline in real income?

https://www.bloomberg.com/news/articles/2021-11-12/economists-boost-u-s-inflation-forecasts-through-end-of-2022

MusicTurner

#1
Talking yesterday to a family member working for a shop selling outdoor equipment, she said that when they had to pay 2,000 Euros for a container unit transport from overseas a couple of years ago, the price had now gone up to ... more than 14,000 Euros.

Hard to see such developments not affecting prices, at least for a while, as regards a lot of imported goods ...

Pohjolas Daughter

Quote from: MusicTurner on November 29, 2021, 12:11:18 PM
Talking yesterday to a family member working for a shop selling outdoor equipment, she said that when they had to pay 2,000 Euros for a container unit transport from overseas a couple of years ago, the price had now gone up to ... more than 14,000 Euros.

Hard to see such developments not affecting prices, at least for a while, as regards a lot of imported goods ...
Sorry to hear of your family member's problems; it must be rough.

It's amazing to hear of all of the problems regarding container ships:  prices for them have shot sky-high, problems getting ahold of them, containers in ports but problems with not enough staff (I believe) to unload them, not enough truckers to transport them to where they are needed, etc.   :(

PD

drogulus

     People are spending their higher incomes into a supply shortage. US income shot up in 2020 instead of falling because the government acted more vigorously than it usually does. But as in the past inflation jumps when supply constraints are severe. The last time supply was severely restricted was in the '70s and before that the late '40s when gigantic domestic savings clashed with an economy that couldn't yet produce consumer goods like it could bombers, tanks and other paraphernalia to fight a world war. It won't be nearly that bad this time.

     Oh, and inflation often fails to meet "expectations". The most dire predictions tend to come just before inflation subsides, as I expect it will in a few months. So, enjoy it while it lasts, because if the inflationistas get their way you can expect the economy to slow and you'll have fewer of those lovely big dollars to play with. Larry Summers has risen from the grave.
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drogulus


     Here's a lovely inflation fact. The increase in wages is a component in the headline figure. Wages are increasing. People don't complain about having more dollars to buy more costly goods. They complain about the nominal cost, but don't bother to calculate the real cost against income.

     Bloomberg columnist Barry Ritholtz explains the wage inflation thing.

     Thing
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Dry Brett Kavanaugh

#5
Grocery prices increased 13.1% in July- highest increase since 1979.
I guess the prices at restaurants will follow. I personally suspect that the labor shortage today is one of causal factors.
I have heard that Wednesday is the best day for buying grocery at a supermarket- cheaper and good quality- but I am not sure.

https://finance.yahoo.com/news/inflation-grocery-prices-increased-in-july-despite-cool-down-143205313.html

drogulus


     Inflation subsides. One might wish it subsides faster, or not. A few months ago I mentioned it would subside in a few months. It's easy to be right, so I don't deserve any special credit.

     Sometimes the Fed will act to recess the economy to inflict double pain on innocent consumers. They will take away your job to cure you of the nasty habit of buying stuff that is short supply. If they don't do that they will be "behind the curve", a bad no good thing.

     It's not clear to me that job loss is better than high prices, or the double pain method is better than letting inflation subside on its own.
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Dry Brett Kavanaugh

The title of an opinion article on Washington Post today- Jerome Powell (Fed Chair) to the Rest of the World: Drop Dead;D
The author says that an increase in interest rate will not lower price, which is pushed by the insufficient supply rather than increased demand.

https://www.washingtonpost.com/business/jerome-powell-to-the-rest-of-the-world-drop-dead/2022/09/15/70e7b764-34b3-11ed-a0d6-415299bfebd5_story.html

Todd

Quote from: Dry Brett Kavanaugh on September 16, 2022, 01:35:55 PM
The title of an opinion article on Washington Post today- Jerome Powell (Fed Chair) to the Rest of the World: Drop Dead;D
The author says that an increase in interest rate will not lower price, which is pushed by the insufficient supply rather than increased demand.

https://www.washingtonpost.com/business/jerome-powell-to-the-rest-of-the-world-drop-dead/2022/09/15/70e7b764-34b3-11ed-a0d6-415299bfebd5_story.html

Powell should push for larger rate increases and more aggressive quantitative tightening, though more caution is needed there to ensure smooth Treasury market operations.  The Fed's mandates apply only to the US.  (Really, price stability should be its only mandate, but that's a separate political and legal issue.)  It would be nice if Powell really could use the now famous phrase from the Ford era.
The universe is change; life is opinion. - Marcus Aurelius, Meditations

People would rather believe than know - E.O. Wilson

The dollar is our currency, but it's your problem - US Treasury Secretary John Connally to European Finance Ministers, 1971

Dry Brett Kavanaugh

Quote from: Todd on September 16, 2022, 01:54:48 PM
Powell should push for larger rate increases and more aggressive quantitative tightening, though more caution is needed there to ensure smooth Treasury market operations.  The Fed's mandates apply only to the US.  (Really, price stability should be its only mandate, but that's a separate political and legal issue.)  It would be nice if Powell really could use the now famous phrase from the Ford era.

That begs the question if a tighter monetary policy will lower the prices or not. If effective, it would be a good policy for consumers, especially those of lower-class people, and it would be adversarial to business owners and industries.

Pohjolas Daughter

Quote from: Dry Brett Kavanaugh on August 11, 2022, 01:29:27 PM
Grocery prices increased 13.1% in July- highest increase since 1979.
I guess the prices at restaurants will follow. I personally suspect that the labor shortage today is one of causal factors.
I have heard that Wednesday is the best day for buying grocery at a supermarket- cheaper and good quality- but I am not sure.

https://finance.yahoo.com/news/inflation-grocery-prices-increased-in-july-despite-cool-down-143205313.html
One trick:  Check the fliers/circulars for specials and then get to the store the day that the new specials come out as they often sell out quickly.  Oftentimes you can pick up or view (online? not certain) the next week's circular at the supermarket ahead of time and it helps for planning purposes.  Note:  in these days and times, sometimes the stores don't get in their specials or don't get them in right away.  Also, some stores give out "rain checks" if they are sold out of something.  You can get them at the customer service desk to use at a later date (ask how long they are good for).

Some other tricks:  buy things like meat in larger (family size) packages and break them up into smaller amounts, wrap well, and freeze.  Or you could work together with a friend and split a package.  Also take a looksie through meat/fish, etc. and produce sections for "manager's specials" which are often items whose sell buy date is very soon (think tomorrow), but the food is still good.  If you can't use it or all of it right away, freeze it.

Just some ideas....

PD

Todd

Quote from: Dry Brett Kavanaugh on September 16, 2022, 08:38:32 PMThat begs the question if a tighter monetary policy will lower the prices or not.

It's not a question at all.  Contractionary monetary policy reduces demand, which lowers prices, though not uniformly.  It's tried and true policy.  The only question is how bad the accompanying recession will be.
The universe is change; life is opinion. - Marcus Aurelius, Meditations

People would rather believe than know - E.O. Wilson

The dollar is our currency, but it's your problem - US Treasury Secretary John Connally to European Finance Ministers, 1971

Dry Brett Kavanaugh

Quote from: Pohjolas Daughter on September 17, 2022, 04:25:48 AM
One trick:  Check the fliers/circulars for specials and then get to the store the day that the new specials come out as they often sell out quickly.  Oftentimes you can pick up or view (online? not certain) the next week's circular at the supermarket ahead of time and it helps for planning purposes.  Note:  in these days and times, sometimes the stores don't get in their specials or don't get them in right away.  Also, some stores give out "rain checks" if they are sold out of something.  You can get them at the customer service desk to use at a later date (ask how long they are good for).

Some other tricks:  buy things like meat in larger (family size) packages and break them up into smaller amounts, wrap well, and freeze.  Or you could work together with a friend and split a package.  Also take a looksie through meat/fish, etc. and produce sections for "manager's specials" which are often items whose sell buy date is very soon (think tomorrow), but the food is still good.  If you can't use it or all of it right away, freeze it.

Just some ideas....

PD

Nice suggestions! I will implement these soon!

staxomega

Quote from: Dry Brett Kavanaugh on September 16, 2022, 01:35:55 PM
The title of an opinion article on Washington Post today- Jerome Powell (Fed Chair) to the Rest of the World: Drop Dead;D
The author says that an increase in interest rate will not lower price, which is pushed by the insufficient supply rather than increased demand.

https://www.washingtonpost.com/business/jerome-powell-to-the-rest-of-the-world-drop-dead/2022/09/15/70e7b764-34b3-11ed-a0d6-415299bfebd5_story.html

Strange article, maybe to be expected with WaPo.

This in particular was bizarre.

Quote
US investors will continue to have no incentive to stray from American assets — and this will starve the rest of the world of capital. The latest Bank of America worldwide survey of fund managers survey, released on Tuesday, shows the largest underweight of global equities in its history. If you're a professional investment strategist, you're not going to be fired if you stick to dollar assets, or just dollar cash. It's hard to see what will change this mindset.

Why should it be on us (retail, fund managers) to invest in foreign markets that have historically underperformed the US? In March I looked up how much I would have lost if I used the ultra conservative three fund vs going nearly all in on US total stock market and it was an incredibly depressing amount. Investors will always need some incentive to invest in something, we are not charities.

Dry Brett Kavanaugh

The United Nations dared to disagree with Todd. WSJ: U.N. Calls On Fed, Other Central Banks to Halt Interest-Rate Increases.

https://www.wsj.com/articles/u-n-calls-on-fed-other-central-banks-to-halt-interest-rate-increases-11664809202

Todd

Quote from: Dry Brett Kavanaugh on October 03, 2022, 05:52:51 PM
The United Nations dared to disagree with Todd. WSJ: U.N. Calls On Fed, Other Central Banks to Halt Interest-Rate Increases.

https://www.wsj.com/articles/u-n-calls-on-fed-other-central-banks-to-halt-interest-rate-increases-11664809202

What did the UN disagree with?  The UN concern is recession.  I explicitly stated that contractionary monetary policy will cause recession, and it is a matter of how bad it will be, not whether it will occur.  When the Fed raises rates, it in effect exports US inflation to the rest of the world and it always ends up causing financial distress in developing countries.  The Fed legal mandates apply to the US only, not the rest of the world.  It is not the responsibility of the Fed to pursue policies that manage inflation or employment in other economies.  In fact, such policies may violate US law.  Since the Fed cannot address tax policy or fiscal policy, it can only use the tools at its disposal.  At least it's not jacking up reserve requirements.
The universe is change; life is opinion. - Marcus Aurelius, Meditations

People would rather believe than know - E.O. Wilson

The dollar is our currency, but it's your problem - US Treasury Secretary John Connally to European Finance Ministers, 1971

vandermolen

We now shop at Lidl rather than at Waitrose! It is much cheaper. We have turned off the heating completely (according to an article in the Times today this is quite good for you). We just heat up the hot water for an hour in the morning. We have an open fire which we haven't yet used this Autumn.
"Courage is going from failure to failure without losing enthusiasm" (Churchill).

'The test of a work of art is, in the end, our affection for it, not our ability to explain why it is good' (Stanley Kubrick).

Dry Brett Kavanaugh

Quote from: vandermolen on October 04, 2022, 05:29:45 AM
We now shop at Lidl rather than at Waitrose! It is much cheaper. We have turned off the heating completely (according to an article in the Times today this is quite good for you). We just heat up the hot water for an hour in the morning. We have an open fire which we haven't yet used this Autumn.

All the measures sound rather fun, Jeffrey! I have minimized eating out, and I found that I prefer my cooking to those at restaurants. Also I stopped buying clothes. Always I liked discount stores, and I continue to use them, ie Dollar General in the U.S.A.. I prefer seafood and fruits to meat/chicken, which are less costly. However, I have no plan to change this.

Dry Brett Kavanaugh

Quote from: Todd on October 04, 2022, 04:41:46 AM
What did the UN disagree with?  The UN concern is recession.  I explicitly stated that contractionary monetary policy will cause recession, and it is a matter of how bad it will be, not whether it will occur.  When the Fed raises rates, it in effect exports US inflation to the rest of the world and it always ends up causing financial distress in developing countries.  The Fed legal mandates apply to the US only, not the rest of the world.  It is not the responsibility of the Fed to pursue policies that manage inflation or employment in other economies.  In fact, such policies may violate US law.  Since the Fed cannot address tax policy or fiscal policy, it can only use the tools at its disposal.  At least it's not jacking up reserve requirements.

Fed is responsible for a prevention of inflation, as well as stable economic growth. Anti-inflationary measure should be formulated in the framework of 'overall' cost-benefit analysis, rather than the inflation Kamikaze- policy for deflation at any price.

Pohjolas Daughter

Quote from: vandermolen on October 04, 2022, 05:29:45 AM
We now shop at Lidl rather than at Waitrose! It is much cheaper. We have turned off the heating completely (according to an article in the Times today this is quite good for you). We just heat up the hot water for an hour in the morning. We have an open fire which we haven't yet used this Autumn.
Any chance of burst pipes come winter?

And what is an open fire?

And, yes, I've been trying to be more economical re food too; you're not alone there.
Quote from: Dry Brett Kavanaugh on October 04, 2022, 07:43:53 AM
All the measures sound rather fun, Jeffrey! I have minimized eating out, and I found that I prefer my cooking to those at restaurants. Also I stopped buying clothes. Always I liked discount stores, and I continue to use them, ie Dollar General in the U.S.A.. I prefer seafood and fruits to meat/chicken, which are less costly. However, I have no plan to change this.
Do you have access to locally caught seafood DB?  That would be sweet!

PD