How is Inflation Affecting Your Daily Expenses?

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The discussion centers on the rising costs of goods and services, highlighting both inflation and shrinkflation—where products are sold at the same price but with reduced quantities. Participants share personal experiences of increased prices for everyday items such as gas, groceries, and rent, with some noting significant hikes in costs, particularly in food and housing. The conversation touches on the impact of the COVID-19 pandemic on pricing, suggesting that some price increases may be temporary while others could indicate a longer-term trend. There is a call for more objective data on inflation, mentioning U.S. indexes like the Consumer Price Index (CPI) and Producer Price Index (PPI), and how these figures may understate actual inflation due to measurement methods. The discussion also explores the potential for sustained inflation due to factors like supply chain disruptions, labor shortages, and increased demand as the economy recovers.
  • #101
Writing for Fortune in 1977, Buffett had a few choice words to say about inflation when he offered the example of a widow living on a fixed 5% savings rate amid inflation that was running at a similar rate. "It makes no difference to a widow with her savings in a 5% passbook account whether she pays 100% income tax on her interest income during a period of zero inflation or pays no income tax during years of 5% inflation," he said.

Speaking as to the hidden tax of inflation, he continued, "Either way, she is 'taxed' in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 100% income tax but doesn't seem to notice that 5% inflation is the economic equivalent."
https://finance.yahoo.com/news/what-made-warren-buffett-rich-is-making-us-all-poorer-193628699.html

Some interesting thoughts from a very wise gentleman.
 
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  • #102
kyphysics said:
a very wise gentleman
When in Omaha, try Gorat's Steakhouse. Warren recommends it as reasonably priced. I ate there a number of times and he's right.

I just checked their menu online. The prices are up from when I was there 11 years ago, but they are still a good deal.
 
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  • #103
ChemAir said:
If you switch to shaving in the shower, when your beard is soft, you will find your blade usage goes down.
Yep. My wife and I share a blade and the disposable razor in the shower lasts for months. It does not hurt that work-from-home means that a shave every day or three is acceptable.
 
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  • #104
jbriggs444 said:
Yep. My wife and I share a blade and the disposable razor in the shower lasts for months. It does not hurt that work-from-home means that a shave every day or three is acceptable.
Seems to grow slower the less you shave. But my beard grows very irregularly and I just look insane with random blotches through my face if I don't shave it at least biweekly. Some of the major stores sell 12+ packs pretty cheap.
 
  • #105
While it might save me money, I refuse to shave in the shower. :smile:

Saw this today:

...wonderful
 
  • #106
I give up. I'm not going out anymore (it's a Friday night too)...

We're close to $5 gas here.
 
  • #107
kyphysics said:
I give up. I'm not going out anymore (it's a Friday night too)...

We're close to $5 gas here.
The government is going to have to figure out how much inflation is real and how much price gouging is going on because businesses and people think they can get away with it. My AC guy charged $60 last year for the AC summer checkout. This year it was $180 for the same work. He did this in two steps. First he upped his price from $60 per hour to $90 then he separated out the coil washing which previously was included and now is extra labor for another $90. I called him and pointed out inflation was 8.5% not 200% but he just said that's what they decided to do because gas was $5 a gallon.
 
  • #108
I do not see that there is any distinction to be made between "real" inflation and "price gouging". If the buyer and seller exchange goods or services for a price then the price is what it is.

In any case, it is (in my opinion) none of the government's business how much you are willing to pay for an AC checkup and how much your AC guy is asking for it. That's what an efficient marketplace is for. Government intervention (e.g. wage and price controls) tends to make the marketplace less efficient than it would otherwise be.
 
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  • #109
jbriggs444 said:
I do not see that there is any distinction to be made between "real" inflation and "price gouging". If the buyer and seller exchange goods or services for a price then the price is what it is.

In any case, it is (in my opinion) none of the government's business how much you are willing to pay for an AC checkup and how much your AC guy is asking for it. That's what an efficient marketplace is for. Government intervention (e.g. wage and price controls) tends to make the marketplace less efficient than it would otherwise be.
I hired them because I knew what the price was except they failed to mention they tripled it.
 
  • #110
jbriggs444 said:
If the buyer and seller exchange goods or services for a price then the price is what it is.
And if an external agency steps in and says "no, you can't charge that much" then you get shortages.
 
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  • #111
Vanadium 50 said:
And if an external agency steps in and says "no, you can't charge that much" then you get shortages.
I'm not suggesting strict price controls. I only suggested greed may be inflating some things more than the market demands. If it spirals out of control things could get real bad.
 
  • #112
bob012345 said:
I'm not suggesting strict price controls. I only suggested greed may be inflating some things more than the market demands. If it spirals out of control things could get real bad.
Certainly, unintentional agreement to a transaction at a higher price than the buyer was actually willing to pay is a sign of an inefficient market. The vendor may be playing fast and loose with some consumer protection rules. But the market is able to deal with this -- you shop for another vendor or do without.
 
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  • #113
jbriggs444 said:
you shop for another vendor
If it costs $60 to make a widget, and someone is "gouging" by charging $100, I have the opportunity to undercut him by charging $90. And you have an opportunity to undercut me by charging $80. And so on.

Fundamentally, we had two years of reduced production, and now there is increased competition for tbose goods and services. So prices rise. Additionally, governments have been funding these two years by printing money, so the value of each florin or guilder has fallen. Prices again rise. This shouldn't be a shock to anyone - we have inflation because we decided to have inflation.
 
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  • #114
https://www.cnbc.com/2022/06/10/consumer-price-index-may-2022.html
  • The consumer price index rose 8.6% in May from a year ago, the highest increase since December 1981. Core inflation excluding food and energy rose 6%. Both were higher than expected.
  • Surging food, gas and energy prices all contributed to the gain, with fuel oil up 106.7% over the past year.
  • The rise in inflation meant workers lost more ground in May, with real wages declining 0.6% from April and 3% on a 12-month basis.
Core CPI (which is ex-energy and food, b/c they are volatile) doesn't reflect the lives of every day Americans. People got to drive and cool/warm their cars/houses and eat you know.
 
  • #115
Vanadium 50 said:
If it costs $60 to make a widget, and someone is "gouging" by charging $100, I have the opportunity to undercut him by charging $90. And you have an opportunity to undercut me by charging $80. And so on.
This assumes an efficient market where one has the time and ability to shop around. That is not always the case.
 
  • #116
bob012345 said:
This assumes an efficient market where one has the time and ability to shop around. That is not always the case.

An efficient market includes the effort to find service/goods providers. If you don't have time to shop around it means the cost of the product is low enough you don't care, or the cost of connecting a provider with a customer is so large that the value you get from just knowing current provider exists is enormous.
 
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  • #117
There's a certain degree of segmented inflation.

People definitely experience it differently. Housing/shelter is 1/3 of CPI.

Yet, renters face far more inflationary pressure vs. homeowners with a paid down (or close to paid down) mortgage. That homeowner has an appreciating asset with potentially zero debt on it (even after factoring in property taxes, maintenance, etc.), whereas the renter is getting crushed with 20% or so rental inflation. A wealthy person can buy in bulk when there is a sale much easier than a low-income person, who may live in a food/grocery desert, lives paycheck-to-paycheck, and cannot afford the gas to go from the poor part of town to a Costco (if that would even help them), etc.. . .
 
  • #118
Office_Shredder said:
An efficient market includes the effort to find service/goods providers. If you don't have time to shop around it means the cost of the product is low enough you don't care, or the cost of connecting a provider with a customer is so large that the value you get from just knowing current provider exists is enormous.
I'm no economist but the above just sounds like you are rationalizing people's actions to fit the model. I can say the above rationalization does not always fit my situation.
 
  • #119


So, we should buy hard liquor and avoid chicken?
 
  • #120
Thread closed for Moderation...
 
  • #121
kyphysics said:


So, we should buy hard liquor and avoid chicken?

Sounds like good advice. After further Mentor review, this thread will stay closed for now. Thanks all for the interesting thread.
 

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