Also, this number is year over year, so the decrease just means the price increases between Oct 21 and Oct 22 are not as steep as between Sept 21 to Sept 22, which is not hard to achieve because Sept 21 to Oct 21 had a bigger month over month jump.
The right way to interpret this number is that high prices have plateaued a bit. Yes that means your groceries are going to be x% higher than in 2020. Short of deflation, they always will be.
This will inevitably lead to people saying the numbers are fake because milk used to be $2/gallon.
Conversely, if there was a one-time jump in a particular item, it will take a year before it gets 'removed' from the inflation numbers.
Extremely contrived example: if gas/petrol was $1/L in December 2021 (and generally in all of 2021), but $1.20/L in January 2022, then there will be a 20% YoY jump in inflation for the January number comparing Jan 2021 to Jan 2022.
Now if gas stays at $1.20/L in February 2022, it will still register as 20% YoY even though the price has not changed month-to-month. That 20% (YoY) is "stuck" in the system until January 2023 when we're comparing $1.20/L to $1.20/L.
A one-time jump can 'skew' the numbers if all you look at is YoY metrics.
My brain swapped annualised with seasonally adjusted. Sorry.
Jul 2022: 0.0%
Aug 2022: 0.1%
Sep 2022: 0.4%
Oct 2022: 0.4%
Here you are encountering a common human cognitive failing, which is the belief that there is some sort of objective answer to the question "are prices going up?" that we should all be able to totally agree on, somehow floating in Platonic space without reference to any particular measure of "prices increasing".
The problem is that if you drill down to the question of "what does it mean for prices to be 'going up'?", you must admit to the fact that there are multiple valid definitions of that. It just isn't possible or plausible to create one true definition.
In the presence of that fact, it becomes inevitable that there will be senses in which the price is going up, and senses in which they are not, and senses in which prices are going up more than other senses. That is the reality, which is complicated.
(One propaganda technique is to take one of these numbers, which really exists and is perfectly defensible on its own terms, and then use it in a context in which you know people are generally going to interpret it as one of the other senses of the term. Excitingly, by controlling which "sense" you anchor your listeners to, both "sides" of a debate can push the numbers in whatever direction favors them at the same time.)
According to our nationally-used, generally-accepted metric, if gas is the same price today as it was 365 days ago, inflation is zero. But does that mean the metaphorical person on the street is "lying" if they say prices are generally going up because gas is 20% more expensive than it was three hundred and sixty six days ago? There is a fundamental arbitrariness both to our metrics, and how we all feel about things. I've seen plenty of "How can annual inflation be %8 if my eggs are 2.5x more expensive than this time last year?" posts around lately. The literal answer to that question is obvious, but if someone's expenses involve more eggs than mine, either because their food is a bigger percentage of their home budget or they are a business for whom eggs is a major input cost, they may feel a higher level of inflation than I do, and they're not wrong. They've just got their own inflation metric that disagrees with the national one, but their own metric may well be more relevant to their life than the national one is.
What’s misleading about reporting yearly percentage increases in prices? I’m baffled.
The YoY is useful for businessmen and economists.
People aren't checking their statements for milk prices from Nov 2021 right now. They just know "man it jumped up".
The point is that the everyday person cares about jumps and trends, and hearing "20% YoY increase" for 12 months is misleading to someone not thinking about it in economists' terms.
The fact a bunch of people here are debating what it means and how to interpret it proves my point.
0% 0% 0% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% 0% 0% 0%
If there's a .8% price increase per month, every month, it looks like:
+10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10%
The upside of reporting this way:
* Seasonal effects are (mostly) removed
* You have to have a lot of context about surrounding numbers to try and distinguish between these scenarios.
* The drop from +10% to 0% is not related proximally at all to the real change.
* Even if you are careful in interpretation, information and context are removed.
It's not very user friendly or useful as a single number to get an idea about what's happening with prices now.
> If we're honestly at the point where this is considered too confusing for the masses, I think I've stopped thinking democracy is a good idea.
I have a lot of knowledge about economics and mathematics, and it's frequently confusing for me and difficult to tease out what's really happening with prices from a couple of macroeconomic aggregates. If that makes you give up on democracy, uh, so be it.
Well, that makes it even worse, the "flow through" you're describing from prices increasing because an input price increased. That spreads the initial shock over a longer term.
But the effect I'm describing shows up even if it's just a single good that steps once. What's measured in the YoY inflation number is a convolution/FIR filter of 12 months of changes.
It is also the case that going extreme in the other direction is ridiculous. Imagine a daily inflation measure. Also nearly useless. "Oh, prices were flat today so everything is fine."
Published inflation numbers in media are usually used to make either the claim "everything is fucked, you should be mad about public policy" or "everything is fine, you should be happy about public policy." To me, this means that the reported should ideally be tied to some cadence that matches public policy. I'm not sure what that cadence is.
This is wrong, but so obviously so that you must be making another point?
Consider how last month everybody was reporting Core-CPI because it was higher than overall CPI and therefore produced more urgent sounding headlines whereas earlier in the year when overall CPI was higher that was the reported number. Yes, headlines said "Core-CPI" last month but if you aren't careful you get a very incomplete picture of things.
(from the comment I directly replied to)
Serves me right for reading too quickly.
The price is still 20% you, and still 0% mom. If reported as inflation still at 20%, does that affect perceptions of inflation, and if so, expectations of inflation? Because expectations of inflation often turn out to be self fulfilling drivers of inflation.
Reported as inflation stable even if it is 20%? Better? Not that 0% is a great target, but that's a separate issue.
Rather than modeling it as "the price increases happened in a short period of time and then went back to normal," I think it's more likely that it happened more spread out and persistently, and perhaps still is going on. It's not going to jump to zero after some given month
Your explanation is fully technically correct, but the subsequent messaging that inflation is zero is a matter of not reading the room.
When an important item dramatically rises in price, this can have a massive impact on people. A dramatic drop in purchasing power or even businesses needing to close. It is impactful.
When the price continues to be high, the impact remains. The pain continues, the problem is not solved. The politically smart messaging is to say "we feel and acknowledge your continued pain, this is what we're going to do about it", not "Good news! Inflation is 0%."
Same with the opportunistic messaging of sometimes using MoM or YoY, whichever number looks better. When MoM inflation in October is 15% and 5% in November, you really shouldn't bring this as good news. The situation still got worse in the real world.
It’s a major reason why society spends so much on education. Stupid people make poor citizens.
“Inflation is transient” fits prices increasing and then leveling out, and does not imply that every bit of price increase is balanced out one-for-one by immediate deflation afterwards.
As for gas prices, it’s going to depend on supply (including refinery capacity) and demand. The $2/gallon of April 2020 was an artifact of covid nuking demand.
It would have been much clearer for them to say, "The increase has slowed."
3rd derivative would be Nixon's:
>When campaigning for a second term in office, U.S. President Richard Nixon announced that the rate of increase of inflation was decreasing, which has been noted as "the first time a sitting president used the third derivative to advance his case for reelection." Since inflation is itself a derivative—the rate at which the purchasing power of money decreases—then the rate of increase of inflation is the derivative of inflation, opposite in sign to the second time derivative of the purchasing power of money. Stating that a function is decreasing is equivalent to stating that its derivative is negative, so Nixon's statement is that the second derivative of inflation is negative, and so the third derivative of purchasing power is positive.
p = price
t = time
dp = change in price
dp/dt = change in price over time = inflation
d^2p/dt^2 = change in change in price over time over time = change in inflation over time = what we are talking about
Without trying to be mean, I would also argue your framing is also poor as some inflation is not bad.
To put it in context, if current trends hold we'll expect 3-5% inflation yoy. That is not awful. Higher than last decade or so but we have had super low inflation for a long time. Averaging out, inflation over the last decades, even including the recent high inflation, will still be pretty low, around 3%.
Also there isn't a cliff, there's only speed bumps for going too fast. At least if movement=inflation.
On the other hand if the "cliff" is supposed to be a specific level of inflation, then we didn't just slow down, we're walking away from it.
If we average 2%yoy every single decade for the next 300 years, people will probably have a lot of trust in the dollar in the decade following. If we hit that same price level tomorrow, people will rightly flip. $1700 milk either way, but in one case we'd expect $1700 milk the following day and in the other we'd expect the dollar to plummet further from the shock of it.
Definitely not a statement that I would be able to visualize :)
These explanations are very necessary so that people develop an intuition of what is going on.
Edit: there are some people saying it's a myth, or not a complete picture. Looks like we don't have the data. But my point is that we aren't very good with numbers or economics.
Many more pretend to be less literate than they are for ideological reasons.
>still remember the classic example that a burger chain released a 1/3 pound burger to compete with another chain's 1/4 pound burger, and many people thought the 1/4 pound was bigger.
This trope needs to be taken out back and shot. It wasn't that people didn't get it. It's that it was poorly marketed and the difference between 1/3 and 1/4 isn't enough to make people go to a burger chain that was dying due to low and variable quality when they could just go to McDicks and get a reliable 1/4lb.
I really liked the 1/3 pound “thickburgers”. I don’t think it was just some dying chain trying to spread rumors about how stupid people didn't understand their marketing and that’s why they “died” (they’re still very much alive last I checked).
Then it should be possible to point to said survey…
The larger point is that it does demonstrate what the actual data shows - that the US has a sizable portion not good at math/fractions or finance.
It wasn't revealed at all until the founder's memoirs in 2007, and it wasn't reported widely until this  2014 article.
So tldr; some people in a private focus group questioned the value of a 1/3 pound burger over the same priced 1/4 pound burger. It's not indicative of any system numerical illiteracy.
I will add there were no actual data released - it's solely based on an anecdote from a A&W restaurant executive.
I would not say Americans in general are dumb though. I would say that:
1) they are under-educated ( and then we can also get about the quality of education for those that were educated )
2) they are very heavily propagandized
Most places that report on this say that the third pounder was cheaper and that Americans preferred the taste, but they didn't buy it because of the name and their poor math skills. But its name was changed to "Papa Burger," and it still didn't become the quarter pounder killer it's portrayed as.
But of course my point was never about the burger. It was just that many aren't good with numbers and finance (in the edit with the links).
Also, the 1/4 or 1/3 is referring to the raw, uncooked meat only. So in theory you can add 1400 lbs of lettuce to make something larger than my car. (Which is terrible, since lettuce is where you pick up all the disease these days - everyone here should order all their food without any lettuce)
But most people aren't thinking that far ahead. They just know I can recharge my car for $10 but it costs them $100 to refill theirs. They know that electricity prices are a lot more stable than gas prices.
The overwhelming majority of car sales people know almost nothing about cars. That's already how you know that their industry is basically useless.
It's also extremely predatory. Anyone trying to pay a 30K mark up on a rav4 prime is being swindled (even if they think they're not). You (the sales person) should prevent obviously stupid car sales (or shit like 25% apr hellcats to US soldiers), but of course not, they're greedy!
They make a lot of their money today selling warranties, service packages, and financing.
I was looking a few weeks ago and the sales associate mentioned that it's starting to come down but they've just struggled so much at getting enough inventory that people were willing to bid up from MSRP. He advised me it's still a bad time to buy a car and that next year will probably be better.
I'm not trying to be the best investor or anything like that - but knowing the basic inflation trend I think would be useful to a large % of the population.
Had we just reported a month on month -0.4% instead of 0.4%, the yoy rate would have been reported as 6.9%. A headline of 6.9% would mean prices are actually going down.
The discussion is around how the numbers should be interpreted. There isn't confusion around what they have literally reported.
The instantaneous slope would be negative if the last month happened to observe a slight decrease, true. But the slope of the line between last year and this year would be positive.
Both statements can be true:
1. prices just fell slightly since last month
2. prices have risen overall since last year
EDIT: you edited your comment I’m not going to update mine.
>> The instantaneous slope would be negative if the last month happened to observe a slight decrease, true
This is sloppy. It's fine, it's a forum, we aren't writing academic papers.
Nobody is trying to figure the slope of the straight line between the two points, that's what is already reported.
Yes, both can be true.
IDK… nobody is really trying to figure out how to interpret the data. People were just commenting that “declines to X%” actually still means that it’s gone up YoY and not that it’s declining YoY and here you are yelling that actually it is declining because recently it went down. Which is false, YoY.
They just take the recent point and the point from a year ago and do the math and report the change. For mom they do the recent point and the one before that, do the math and report.
Some people actually know what the CPI is, how it gets reported, and understand the shortcomings of said reporting. If you aren't one of those people, it's silly to go around correcting others.
The yoy is just using two points very far apart. The mom is using two points closer together. It would be nice but practically impossible to measure it instantaneously, mom is about as good as we get.
If you are right, I'd guess the cost benefit probably isn't there regardless.
And nobody is suggesting changing the x-axis. It's still time. The distinction people are making is which points does one use to calculate the slope? The most recent two? The most recent one and the one from a year ago? What are the implications of each?
I didn't see any thread of discussion that you’re alluding to where people were trying to interpret what the data actually means. There was simply a word of caution about making sure not to let the headline confuse you. Then some incorrect and sloppy comments appeared like “actually this is incorrect data because the price is trending down MoM don’t be fooled”. That’s an entirely different thing. Hence why you see all the people trying to explain how it’s silly. I didn't introduce confusion by changing the slope calculation… I’m just responding to it trying to clean up the mess it’s made.
I’m seriously confused: what is your actual point?
The comment was in response to a comment that was speaking to nuance and basically said there's even more nuance. It's right there to see.
That’s the number that matters in a forward looking instrument like the market
Or is this a specific criticism of a regulatory blind spot for reigning in market power? Monopolies can get away with price increases now, but they wouldn't normally?
This is actually great (if noisy) news. 2 months of 0.4% CPI increase is equivalent to 5% yearly inflation. But the YoY is still high because it was much worse 8-12 months ago.
I hadn’t even considered that people will think low numbers are a lie because prices don’t go down. But of course (sadly) you’re right.
This part is true.
> that means your groceries are going to be x% higher than in 2020
But this part jumps right back into the much bigger fallacy that inflation represents a change in value and not price! Sure, groceries are higher in price, just like your assets are higher in value (on average) and your wages are higher (on average).
But in any case, your notion that inflation isn't instantaneously halted is a little spun. In fact month-to-month CPI change for October is 0.4%, which corresponds to about 4.9% per year. That's higher than we've seen for most of the last decade, but not a number most people would consider "high" in the sense of "disruptive to economic activity".
I think the best way to understand it is to just look at the index itself  and not the first or second derivative.
The only thing we can hope for is that, as inflation numbers continue dropping back toward "normal", wage increases will eventually catch up and make those already-higher prices less difficult to swallow. Of course, it never works out that neatly.
I've been tracking my expenses since 2015 and they're up around ~50% since then, for effectively the same food (eggs, bread, meat, etc). I eat ~2800-3000 calories per day (which I also track) and that's been consistent.
According to BLS it should be up only 27%, but everyone knows that's just not true. Remember ~1 year ago when the administration was calling prices "transitory", that means they're claiming a larger elasticity in prices so inflation doesn't look bad because they believe they'll come back down (soon).
The difference is important, especially because we're looking at a yearly increase every month. The derivative of the annual inflation is not d^2p/dt^2 but (dp(t)/dt - dp(t-T)/dt).
It means CPI_oct22 - CPI_oct21 < CPI_sep22 - CPI_sep21
d^2p/dt^2 isn't necessarily negative.
or over a longer time period: https://totalrealreturns.com/s/USDOLLAR
(this site is my side project)
If "p" is the relative price level index (CPI-U in this case), then "1/p" represents the relative purchasing power of a single dollar over time -- explained on homepage in more detail.
A good time to but the 10 year Bond IMHO.
Do you think I should have bought it when the price peaked?
What I am saying is that the "market", which is now controlled by AI reading newsprint, is wrong and that 10 Year Bonds will increases again.
You don't think I know how bonds work? Yet you agree with me?
You might as well say "I don't understand how bonds work". It's fewer words.
I don't know why pricing for the generic brands wouldn't increase as much. Perhaps some stores see the large price increase in branded soft drinks as an opportunity to get people to shift to the store brands and are willing to tolerate lower profit margins to see if that strategy pays off.
Coke spent $4B on advertising in 2021 , which is about a quarter of their costs. 
 - https://statstic.com/coca-cola-advertising-costs/
 - https://www.macrotrends.net/stocks/charts/KO/cocacola/cost-g...
With Coke it's the quality (and consistency) of the product. I've never tasted anything "as good" as Coke. A new fresh cold can has a bite that simply nothing else has.
4 billion a year on advertising something everyone knows about...
They could both stop advertising forever and I would still have those associations for the rest of my life.
I also prefer Mt. Dew over them all so....
So I do see your point, I just don't get how that influences people. But again, I recognize it must to enough of a degree- I just don't feel like I'm one of them so it's hard to personally understand. Maybe I am, but I think I'm being objective about it.
Sure, not every person is a Coke consumer. What drinks do you drink?
Keep in mind, a very meaningful part of Coke's (and any other CPG company) advertising budget is paying grocery stores to put their products in prominent locations.
Do you think you’re immune to ads? Or that ads don’t work at all?
I think it’s reasonable that you’ve never seen an ad and consciously bought a coke, but that’s rarely the point of coke.
We’re not aware of all our subconscious motivations. I’d like to be, but it’s usually pretty hard for me to understand why I do things at a deep level.
This isn’t true in all cases. When I first drank a coke I was very young and wasn’t even aware of advertising. The first coke I drank was because my parents took me to McDonalds and that’s all they sell. Then I found I preferred it over Pepsi. Advertising had very little to do with my first coke, it was more contracts with fast food companies.
Also known as 'advertising.' (Coke has an insane amount of control over how their products are sold at McDonalds, down to how the soda fountain equipment can look) Why do you think PepsiCo Bought KFC/Pizza Hut/Taco Bell (before spinning them back out as Yum!)?
Coke spends money so that every time you are thirsty you reach for a Coke, and part of that is the immense amount of work they do to make Coke the only beverage available in places like McDonalds, AMC, United Airlines flights, etc.
Your parents were. Or whoever it was that bought that coke.
You "found" that either because of advertising, or because you were primed to like Coke more because of your childhood experience.
And the reason McDonald's only sold Coke? Advertising, of course. McDonald's believed they were better off selling Coke over Pepsi.
Advertising is everywhere. I try to avoid advertising as much as possible (adblockers, never watching ad-supported TV or movies, etc.) because I know how pervasive ads are, and how insidiously emotionally manipulative they can be. I know I can't make myself immune to their effects, so the best I can do is just avoid them as much as I can.
Coke does not pay to be in fast food restaurants. It’s the other way around. This would be the weirdest form of free advertising, but I think people are using that term very loosely in this thread.
Except when I watch broadcast TV and some TV shows with products embedded, I do not see ads. But the first time I had a coke was long before adblockers existed.
Also, prices for coke in plastic bottles are also up.
Most notably it resulted in a big reduction in the variety of food available because while some of the biggest companies could survive with the new lower prices (and work with the gov directly to set those prices) the bulk of small/medium sized ones couldn't, often as other expenses eventually increased while prices didn't.
Price controls are a pretty big deal though. Especially in a low margin industry you run the real risk of putting firms out of business and damaging supply. They're very dangerous when done wrong.
Not directly or quickly, no. Fully agreed that price caps and other invasive measures are usually counterproductive.
I was only pointing out that in a market economy led by profit-seeking CEOs, pushing pricing up is expected. Listening to those clips, they sounds downright sociopathic, but it's just another Tuesday in America.
The best way to deal with this is likely ensuring workers are paid a fair living wage. And take the appropriate measures to curb the worst of the inflation.
I don't see how it will create more competition.
And this is from a food cart, mind you - not a restaurant. And not a fancy food cart that people drive miles to try their unique food. Just a few years ago that sandwich would have been $8-9.
Something like Spindrift is a partial substitute.
A real substitute is Izze. Less sugar, but still sugary. Tastes awesome - better than Coke.
It can be, if you commit to really reducing your sugar intake. I did it, 20+ years ago, completely giving up soda. My go-to drink for every meal is water, and I drink water throughout the day from a large water bottle. I still consume sugar here and there in food (or the occasional cocktail), but I eat much less of the stuff than I used to. It's hard in the US, where everything has so much sugar, but it's doable.
The less sugar you consume, the less your body/brain will want and need it. It's like an addiction...
Yes, you the single person going generic will definitely send a message to Coke!
Hey I get your "sending a message" concept. But you also have to be realistic. Coke is almost literally everywhere you could possibly go. A lot of times it's basically the only option aside from a grocery store. It's popularity is so high and it is to be fair a quality product, that you as the individual are never ever going to have anywhere close to a material impact no matter how hard you believe.
Also, most people agree it is objectively the superior product. So while you may save some money, you are also getting a shitter version of something that is already bad for you.
Send a message with your wallet- sure. But don't be so naive that it will actually have an impact for something like Coke. You are honestly just hurting yourself in the taste department to save a negligible amount of money. It's a no-win.
I’m not sure how much they’ve increased as I don’t remember the old price of crackers but I remember them being really cheap.
It seems odd that the inputs vary substantially between the two so is it just that Nabisco has very different labor costs? Or are they just jacking up the price because they can?
I suspect store brand have a very fixed cost-plus style of pricing where they just sell for a fixed markup over whatever their costs are and don’t really do market research for price points.
And bring back the "White Label" groceries from the 80's while you're at it. http://historysdumpster.blogspot.com/2012/08/generic-product...
Sellers do not determine the market price for anything. Buyers do by what they will pay. Sellers can specify a price, but any transaction actually happening is only determined by the buyer. (Setting the price can be intended to apply psychological manipulation to the buyer, which often works.)
If you are complaining about the prices of anything, your complaint is not with the seller, it is with other buyers who have proven they are willing to pay it.
How that didn't drive the price back down to $1 or up to $2 I'll never understand. It had to have increased labor on the parts of the vendors and decreased demand for the vendors at the same time. That's about the time I started just stocking a 6 pack or 2 liter (depending on which was cheaper per oz) in the fridge for the week, too, which drops the unit price.it also decreased the total volume of soft drinks that I bought.
I don't know how soft drinks can continue to increase in prices under that dynamic. My guess is that the majority of people just buy it and don't notice anything that costs less than $10 anymore, so convenience stores can get away with movie theater prices as long as they don't cross that trivial threshold. People will pay for convenience under $10.
I remember buying 2L bottles for $0.99 on a regular basis (they often had sales). I don't drink it anymore (one month and counting) but i do check the prices weekly out of habit and never see it below $2.29/2L now?
I actually just checked and it has gone up in price once again, now $2.49/2L