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US annual inflation declines to 7.7% in October vs. 7.9% expected (bls.gov)
403 points by ericliuche 82 days ago | hide | past | favorite | 543 comments

It bears repeating because this is a common mistake in inflation discussions: a decrease in inflation metrics means price increases are slowing down, it doesn’t mean that prices are going down (that would require a negative CPI print).

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.

And to add to your explanation, because inflation jumped so quickly and then slowed we'll eventually hit a YoY number that plummets. If milk is $4/gallon today and still $4/gallon 12 mos. from now, that's 0% YoY inflation.

This will inevitably lead to people saying the numbers are fake because milk used to be $2/gallon.

> If milk is $4/gallon today and still $4/gallon 12 mos. from now, that's 0% YoY inflation.

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.

Which is partly what we’re seeing. CPI rose 0.4% MoM in October, or 4.8% seasonally adjusted. That’s above target, but better than YoY.

Really wish we reported the 4.8% number. Seems more reasonable for a monthly report to focus on the changes of the month.

I agree it's confusing. I think they do it to remove seasonality and the experts on the topic probably don't understand anymore why the rest of us think their way of reporting is confusing to lay people.

Seasonally adjusted != multiply by 12. Prices naturally fluctuate throughout the year due to weather, consumer patterns, and business cycles. Seasonal adjustment is an attempt to account for those changes.

> Seasonally adjusted != multiply by 12

My brain swapped annualised with seasonally adjusted. Sorry.

Beyond seasonal price fluctuations, wouldn't it be 1.04^12 = ~6% annually?

0.4% is 0.004, so 1.004^12 = 1.049... or 4.9%

Derp, yeah. Thanks.

I agree the annualizing the monthly figure would be handy, as an additional figure. Looking at annualized monthly figures, it was also apparent (say) six months ago, that the monthly annual figures would almost certainly continue to get worse.

Also note the four most recent (seasonally adjusted) monthly CPI numbers:

  Jul 2022: 0.0%
  Aug 2022: 0.1%
  Sep 2022: 0.4%
  Oct 2022: 0.4%

It’s not really skewing anything though, since the price is 20% yoy?

It is skewing if you are looking for an up to date change. It's like, is it better to get two points on a curved line and draw a straight line through them, or is it better to calculate the derivative and the the slope at a specific point?

That depends on how noisy or smooth the changes are. That's why it's valuable to look at both.

It may be - but to the above poster's point - if gas went up 20% in Jan of this year and then stays flat... is it helpful to think of prices as "going up" ? It seems misleading.

"is it helpful to think of prices as "going up" ? It seems misleading."

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.

Most people in this thread are using prices and CPI interchangeably, for better or worse. My read of the thread is that most people in the thread know they aren't actually the same thing.

If the last time you looked was last year, then yeah. They went up this year.

What’s misleading about reporting yearly percentage increases in prices? I’m baffled.

The misleading bit would be reporting yoy price increases every month. Still not necessarily misleading to someone trained in reading this data, but the average lay person would probably interpret yoy statistics reported monthly incorrectly when comparing adjacent months

Who’s doing that?

Everyone. Just about every report is talking about how the yoy numbers are changing each month.


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.

And yet that's the same kind of distinction that you need to understand to be able to make decisions about household debt. 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.

If there's a true step change that happens once (and nothing else), inflation looks like:

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

The downside:

* 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.

And it's not even a theoretical issue. Look at the energy component of CPI. And then consider how that flows through to food and transportation. It is very possible that the vast majority of what we are seeing is the result of a big jump in energy prices over a few months, 8-10 months ago.

> Look at the energy component of CPI. And then consider how that flows through to food and transportation. It is very possible that the vast majority of what we are seeing is the result of a big jump in energy prices over a few months, 8-10 months ago.

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.

yup, you are right.

Maybe that is why we have a republic with representatives? Of course we can just shift the discussion to point out that US Congress critters don't seem to have a strong grasp on these topics either. :-(

I think that's exactly why we have a republic with representatives, but I don't even think people are qualified to pick good representatives. A campaign can easily pander to people who are acting selfishly or stupidly. At the end of the day, if you have people who can't even understand compound interest by the time they're entering university and who can't do a cost-benefit analysis on loans, why are those people supposed to catch nuances in monetary and fiscal policy and select from a panel of alleged experts?

Imagine a more extreme case where we reported inflation over the past 50 years each month. Every month we compute the price of the basket 50 years ago and the price of the basket today and compare. This number would go up when the most recent month had more price increases than the month 601 months ago. It would go down when the situation was reversed. It would be a number, but it would tell you very little useful information.

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.

You appear to be saying: factually reported data cannot be misleading.

This is wrong, but so obviously so that you must be making another point?

Misleading implies the data has some agency. Data cannot be misleading. People can make whatever conclusions they want based on data at hand and it’s just bad analysis if it’s wrong. The data didn't mislead them.

That data was picked by someone out of all the data in the world. That's where the agency is.

A Federal agency: BLS.

Sort of. BLS also publishes other numbers. Media outlets choose which one to report.

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.

Weird take. Most will agree "deliberately misleading" is what you are talking about.

I don’t think anyone was saying it was misleading, rather they were pointing at a nuance of the data.

> It seems misleading

(from the comment I directly replied to)

Huh, well, fair enough.

Serves me right for reading too quickly.

That literally leads to the conclusion that prices rose, in your example.

The conclusion that “prices rose” is the correct one. What you should not conclude, even though the inflation has been at 20% all year is that “prices are (still) rising”.

But they have risen since last year. YoY they are still rising.

You can't use "rising" to strictly talk about the past. You need to expect it in the future too. If you don't expect the price to be higher a year from now, then it's not "rising YoY", it merely "rose YoY".

It isn't, yet it is.

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.

Even in the early 80s after huge interest rate hikes, YoY CPI inflation stayed above 2% (until the mid 80s).

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

Honestly, I'm with those people.

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.

That's a different issue. "High prices" are a problem, but that's not what "inflation" measures. There is no way to report inflation (derivative of prices) that correctly reports "price/wage ratio", which is what people really care about.

How to set inflation expectations - "Inflation shoots up like a rocket & floats down like a feather."

It's bullshit because it's an average of everything that no one buys. My grocery bills have doubled since 2020, meaning my CPI was 100% over 3 years. I will not shut up as you and many others are trying to force me into accept it's 10% inflation.

The Canadian government provides a personal inflation calculator. You may see higher or lower personal inflation than CPI. https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020cal...

Especially when their incomes didn’t double.

People who lack foundational skills in math are always vulnerable to being worried about witchcraft and conspiracy.

It’s a major reason why society spends so much on education. Stupid people make poor citizens.

Don't be surprised when politicians use this to their advantage next year.

@matwood it is a disaster for working people regardless as wages are not keeping pace with the effects of inflation.

Month on month numbers are still slightly up.

If "inflation is transient" when is it going back to 2/gal?

You're making the same mistake. If inflation is transient, the price _increase_ is transient, but the high prices remain. It would only go back to 2/gal if the high prices themselves were transient. Which I really hope is the case, but IDK.

“Inflation” means “increase in price levels”. That’s it.

“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.

Transient inflation means the $4 / gallon milk prices stick around and don’t go any higher. Going back down to $2 would be deflation.

They effectively said, "The increase went down."

It would have been much clearer for them to say, "The increase has slowed."

Or clearer still "The increase is smaller than expected."

That this month's rate is smaller than expected is a completely different thing to it being smaller than last month's rate.

It seems both are true in this case, but yeah, those two statements don't really mean the same thing.

This is like the 3rd derivative, right? e.g. we now have a slightly lower rate of acceleration towards the cliff than before?

I think it's second derivative.

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."[2] 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.


Second derivative:

  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

Second derivative I think. Inflation is change in prices. Change in inflation is a second order derivative? I wish more Americans knew at least a little conceptually about derivatives. Personally, I need to review them. Anecdotally, the number of accountants that I've met that haven't progressed beyond middle school level math is depressing as well.

No, acceleration is going down. Not a lower rate of acceleration. The second implies acceleration is still increasing, but at a slower rate. What is actually happening is we're decelerating (so we're still going fast, meaning inflation is high, but inflation is going down...)

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%.

The velocity has slowed.

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.

There's no cliff (at least for this to be the third, or even second, derivative with regard to.) Its not like there is a magic bad nominal price level.

Right, the cliff is when people lose confidence in the dollar, which probably has a lot to do with the inflation rate, changes in the inflation rate, and the duration over which we've seen what sort of behavior (... and probably a lot of other things) but not much to do with the actual price level itself.

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.

What would the fourth derivative of inflation be? I can’t get my brain to work for that.

Since inflation is a 1st derivative of price, 4th derivative of inflation would actually be a 5th derivative of price. It'd be like: "The increase of the acceleration of the rate of price increase is slowing."

Definitely not a statement that I would be able to visualize :)

Well explained. Idk for english-speaking countries or your country of origin but the average spanish is an absolute illiterate in economy.

These explanations are very necessary so that people develop an intuition of what is going on.

Many Americans are illiterate on numbers and the economy too. I 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...

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 Americans are illiterate on numbers and the economy too

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.

There's certainly more than just the number confusion, but I specifically remember the case study we were looking at included a survey where a sizeable number of respondents said 1/4 was bigger than 1/3.

I don't know anything about this particular one, but just because it's a case study in a textbook doesn't mean it's true. There are lots of untruths that get propagated long after they've been debunked.

But they’re citing a survey where people literally didn’t get it. That, if not made up, factually supports the claim that some people really do think 1/3 is less than 1/4.

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).

> But they’re citing a survey

Then it should be possible to point to said survey…

If you had the survey in hand you could point to it. Proprietary information is not news and exists even in academia (cf. scihub).

Sure, but there's nothing presented to debunk this so far. So far all the "testimony" shows it to be true, but it could be propaganda.

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.

I’ve always thought this was somewhat apocryphal/a myth. Did it actually occur?

It's hard to find contemporaneous evidence, because it was apparently revealed by an internal company focus group, but here's [0] the page from the company themselves with the claim.

It wasn't revealed at all until the founder's memoirs in 2007, and it wasn't reported widely until this [1] 2014 article.

0: https://awrestaurants.com/blog/aw-third-pound-burger-fractio...

1: https://www.nytimes.com/2014/07/27/magazine/why-do-americans...

this is a 'haha Americans so dumb' myth that's been blown up - it's the result of a NY Times article that outline a private restaurant chain focus group result.

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 was exposed to this myth in my youth as various European nations described their misadventures in the US of A or encounters with Americans and as a result came to US with wrong expectations. Now that I live here, things a little more clear to me. It is a nation of more than 350 million people ( depending on how and who you count ). Even a small percentage of certifiable idiots will be very well represented in terms of absolute numbers.

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

Even more than that, the accounts we get claim that some of the people in the focus group said the 1/3 pound burger was smaller than the quarter pounder. Even if those claims are accurate, it's possible they were looking at the diameter, since the 1/3 pounder has two smaller patties stacked on top of each other, while the quarter pounder is one large patty.

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.

Since you bring up the name change... didn't it sell better after the name change?

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).

Stupid people exist. It’s happened. In fact, it’s a pretty easy mistake to make if you don’t understand fractions. 4 > 3.

And since we don't know the context they could have shown a closer up burger, or heck, taller burger that is 1/4 and a 1/3 next to each other but further away or stepped on at which point they were asked, what's bigger?

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)

I have a degree in it and I often don't feel that I know anything. For a guy who did a lot of STEM economics is a pretty odd subject in many ways. A mixture of interesting insights, strange models, and a lot of soft talk.

Also it is worth mentioning that part of the major reason accounting for inflation is car price. It’s going down now as chip makers produce more and prices go down further.

It's also going down because it's a debt market and financing is more expensive w/ used car interest rates at 9% instead of 4% and new cars at 5% instead of 0%...

I expect the number of car sales in the US to go down significantly like it has in Europe. Interest rates are one major factor, but another is the electric transition. Anecdotally I know quite a few people that aren't buying new vehicles right now. They're the kind of people that buy a new car every 10 years or so, and are delaying their purchase or buying used. They realize it's a bad idea to buy a new gas car but aren't yet ready to buy an electric car because they don't understand them yet, they're too expensive, have a massive backlog, or don't come in the style/variant they want.

Why is it a bad idea to buy a new gas car? ExxonMobil is not going to stop pumping oil out of the ground.

My reasons: in 10 years time most local gas stations will be closed, 95% of the demand for used cars will be for electrics and 97% of the supply will be gasoline so the car will only have its scrap metal value.

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.

I agree with your general sentiment, but I think this timeline doesn't necessarily extrapolate well for the United States. The average age of a vehicle on the road in the US is about 12 years - aftermarket suppliers as well as oil/gas companies have a very strong incentive to plan that far ahead in order to keep up with the demand. Especially given that the quantity of gas vehicles on the road will be, as you say, such a large percentage of the market.

Miles/year of old cars is a lot less than new cars. So demand for gas in 10 years might be about half of what it is now. Some stations will still do well, but a lot of marginal stations will disappear.

Fuel can also be delivered at ones home or people can install their own fuel tanks that can last a few refills. Just a thought.

Gas exploration is way down. No gas production won't stop, but supply growth seems to be completely stalled while demand is not due to developing countries continuing to get richer. Gas will likely continue to be expensive as we transition away from fossil fuels.

Gas prices ice bans and global warming. If you buy a gas car today, I wouldn’t expect much in terms of resale value.

Hopefully that helps with new car pricing. Dealers are still selling well above MSRP.

Car lots need to be knocked down a peg or ten. Car sales folks are the scummiest folks on earth and they have been empowered by this disaster of a market for too long.

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!

I don't buy cars often but it seems like the last decade or so, the major dealers anyways, don't play a lot of games like they used to. They put a decently fair price out there and can maybe knock a bit off but with some much information about cars today (CarFAX, BlueBook, searching online) it's really difficult to swindle people. So they just list a fair price and go from there.

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.

They are only selling well above MSRP because people are willing to buy well above MSRP

Well, yeah. There was an imbalance in the market between the supply of cars and the demand from consumers for cars. People were willing to spend more than ever, especially with super low interest rates making it nearly free to borrow money.

Anyone else feel like this is such a dumb way for the general public to track inflation. Like, a simple line chart with the X axis being time and the Y axis being the price of a basket of goods would be so much clearer

Is inflation (meaning CPI figures) meant for the general public? It's a useful economic tool, but not very relevant to the average Joe. I would think expansion of cost of living is what the general public is interested in, and for that they have to track their spending, and can do so in any way they see fit.

I'm in the general public. Basically anyone not in finance or economics I'd consider to be the general public. It's still important to know the trend to know how and where to invest your resource.

If you're utilizing the inflation figure, are you really the average Joe, and if you are utilizing that information are you really going to stop with the headline figure? Inflation is more nuanced than is captured in a single variable.

It's prob the reason the average Joe doesn't look at inflation - because its presented in the worst way possible.

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.

That's why we don't use it.

This isn't right. It could in fact mean prices are going down.

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.

Anything positive YoY means prices have gone up overall over the last year. For prices to have gone down in general over the last year, the YoY would have to be negative. A headline of 6.9% would mean prices have gone up.

You're just talking about different time frames. Yearly inflation can be positive and prices can also be lower than they were last month. Ergo prices are going down but inflation still positive.

The slope of price v time would be going down if they'd posted 6.9% yoy.

The discussion is around how the numbers should be interpreted. There isn't confusion around what they have literally reported.

Nope. You are continually overlaying data with different X axis and trying to draw conclusions and sound authoritative and it’s just sloppy and irresponsible.

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.

Same x axis - time. CPI is a time series, you get a point every month. Everyone is trying to draw conclusions, it's the point of this thread.

>> 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.

Sigh. Obviously we’re talking time here. The scale on the X axis, the interval that appears on the graph between two points, is different if every unit is a month vs a year. Months and years are different units of time.

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.

Scale is the same. The CPI reports every month. It's one chart, a single index, one point per month.

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.

I… do… know that. That’s why I’m trying to clear up the shitstorm you’re causing by deliberately being provocative. You sound like a manager trying to deceive reports into thinking they don’t need an inflation bump this year because “look inflation is lessening” or something.

Year-over-year inflation doesn't tell us anything about whether prices are going up or down right now.

No historical data is going to tell us the future. But it can give us an idea of the trend, which is useful since in a large system like the economy the trend tends to change relatively slowly as compared to individual compentents.

A statistic is only useful if you know how to interpret it. Case in point: you can have double digit year-over-year inflation, while simultaneously falling prices for the last 11 months.

This doesn't make sense. Falling prices for what? CPI is a measure of cost of a basket of goods. You can't have net aggregate falling prices and a rising CPI unless you are measuring different prices.

CPI up 20% month on month in month 1. CPI down 1% month on month for the remaining 11 months. That would result in what they are saying.

Ah, so not mismatched prices/goods, but mismatched temporally.

It's just about how are you measuring the slope? Like, when you first learn derivatives and the math teacher draws a line between two points on a curve, then draws another from points closer together, then draws the tangent, then goes through how you get to a derivative function etc.

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.

I can get the prices for goods online, and then get them delivered to my house. Getting the CPI more often seems entirely feasible to me if we really wanted to.

Maybe. But online isn't the only place to buy, and to arrive at a single number they do all kinds of adjustments to account for seasons, locations etc.

If you are right, I'd guess the cost benefit probably isn't there regardless.

Which is still stupid to even be arguing about. It’s like people are trying to find a problem with data that is objectively reported by arguing that if you change the x axis you get an entirely different conclusion. No shit… that’s how data works.

No one is suggesting there is a problem with the data. They are discussing how best to interpret it.

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?

From what I can gather you’re trying to suggest that prices are going down because “recently” they have been (which isn't even true MoM they’ve still increased). That’s a pretty sloppy and inaccurate statement without a very precise definition of recently, which has been omitted. And YoY it’s not true.

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?

No, definitely not, and they haven't, not yoy or mom. Terrible gathering.

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.

Inflation over the last year was 7.7% - if the October rate holds for a year, it will be under half of the last years inflation rate coming in at 3.6%

That’s the number that matters in a forward looking instrument like the market

Which businessman in their right mind will decrease the price of their products because of cost decrease? Not unless there is intense competition. Because of that for large scale monopoly business like commodities once the prices go up it may not come down again.

I may be missing something, but if there is no competitive pressure/monopolistic market, why would these businesses need the excuse of inflation/cost increases to increase their prices? Wouldn't we expect prices to have gone up before inflation?

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?

The argument is that they had market power before, but were afraid to exercise it for political reasons or because they feared enforcement action. Now, with inflation, the company has an excuse to raise prices, but now they're raising them only partly due to increased costs, and partly as an exercise of their market power.

What is "before inflation"? Deflation is bad it means you should keep your dollars instead of investing them.

Do you buy less food when interest rates on your investments are higher?

If you sell commodities that is literally the opposite of a monopoly

Yes the YoY number is useful for getting rid of seasonal variations. The monthly CPI is also noisy. But when there’s a big spike over a few months (like we had 8-16 months ago) YoY won’t go down meaningfully for at least a year.

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.

The seasonality aspect is a distraction when inflation is so volatile due to all the pandemic craziness.

> The right way to interpret this number is that high prices have plateaued a bit.

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 of it like the accelerator pedal on a car. A decline in inflation means the foot has eased up on the accelerator some, but the car is definitely still moving forward.

You mean a negative CPI growth / CPI decline, right? With a negative CPI stuff would be free + we would be getting money on top (on average) :D

I think the best way to understand it is to just look at the index itself [1] and not the first or second derivative.

[1] https://tradingeconomics.com/united-states/consumer-price-in...

Sure, but this is still exactly what we want to see. If the target is 2%, YoY metrics moving in that direction is a positive step.

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.

Couldn't some goods in the basket be slightly negative while others are positive? For example if rent went down relative to last year's baseline but groceries, gas, etc were all very much up.

The number is largely manipulated anyway. It's more complex than even this because you have to account for price elasticity. They are giving oil a very wide fluctuation, for instance.

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).

You could just say: CPI is up 0.4% month-over-month. It gets reported.

As a general consumer, the slowdown in the erosion of my earning power is welcome news. My gamma hedging hedging costs have never been lower.

For the mathematically inclined among us, dp/dt is still positive. It's d^2p/dt^2 that is slightly negative.

Though the mathematically inclined should also know that we're not looking at dp/dt, we're looking at p(t) - p(t-T).

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).

Anyone who's ever had to numerically estimate second and higher derivatives from noisy data can appreciate how difficult the Fed's job is.

Not really.

It means CPI_oct22 - CPI_oct21 < CPI_sep22 - CPI_sep21

d^2p/dt^2 isn't necessarily negative.

'Inflation is slower now than it was this time last year.'

Oh, right. I mixed it with month-on-month inflation.

For the mathematically inclined, here is a graph of 1/p over the past year:


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.

Many words for something that can be explained by a single cumulative CPI graph.

Of course it probably needs a second graph under it of 2% cumulative CPI for comparison.

I.e. the rate of price increase has slowed, not the price increase itself

Prices are still increasing, and they are still increasing fast. It's just that recently, they increased even faster than now.

And I find it hysterical that the 10 year Bond dropped 4% because of this. They think this is the peak, as in the Fed will stop raising interest rates and inflation will only get lower from here.

A good time to but the 10 year Bond IMHO.

Why would you suggest buying a bond on the exact day that yields just plummeted.

It is funny to me that this does not make sense to you.

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.

I don’t think you understand how bonds work. However I do agree that yields will increase and this is temporary.


You don't think I know how bonds work? Yet you agree with me?

> the "market", which is now controlled by AI reading newsprint

You might as well say "I don't understand how bonds work". It's fewer words.

Anyone notice that brand name soda (looking at you Coke) has increased almost 100% while the generic/house brand has had slight increases. I feel like Coke is testing the pricing limits of its customers especially with the smaller packaging and these prices will not come back down.

If you check Coke's financial statements, you'll see that although revenue has risen quickly, cost of revenue has risen about as fast, leading to relatively unchanged gross profit margins (36% so far in 2022, compared with 40%+ in every year from 1985-2014 and between 33%-39% from 2015 to 2021). Word from industry press is that the rising price of aluminum has been a major driver of the increased costs.

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.

Store brands have very little advertising costs, for one.

Coke spent $4B on advertising in 2021 [0], which is about a quarter of their costs. [1]

[0] - https://statstic.com/coca-cola-advertising-costs/

[1] - https://www.macrotrends.net/stocks/charts/KO/cocacola/cost-g...

I guess I must be wrong, but I'll never understand why Coke needs that much advertising. Or anything "that well known". The argument is maybe they are that well known because of advertising, but I just don't think that's the case. Maybe for a crappy product, but not a good product.

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...

In blind taste tests, Coke performs about as well as Pepsi. However, people still overwhelmingly seem to like Coke, so it's really because they like the brand. If they reduced advertising, their brand will slowly be eroded.

I interviewed a guy who worked at Pepsi. He said their own tests actually showed that people enjoyed Pepsi for the first sip but then preferred coke when drinking more.

Pretty sure that's because Pepsi is sweeter (the regular non-diet version). The sweetness is initially preferable, so it tends to win out in the "Pepsi Challenge" but then is overwhelming when you're drinking the whole thing.

In my case I am sure that I like Coke better because of the packaging and logo design. Red & white with an old-school cursive text focuses my brain on the spicy interesting flavors. The smooth blue Pepsi logo with the circular logo makes me focus on the sugar. That, and their various "look how cool and hip we are!" Pepsi ad campaigns over the decades always seemed goofy.

They could both stop advertising forever and I would still have those associations for the rest of my life.

Remember "New Coke"? The Coca Cola people responded to taste tests that indicated people like Pepsi better by making it more sweet like Pepsi. Sales and PR disaster ensued, famous case study in MBA courses.


still think it was a trick to change the formula of "classic" coke to cheaper ingredients.

I dont know if I am alone but for me I prefer Bottled Pepsi over Bottle Coke, but Fountain Coke over Fountain Pepsi

I also prefer Mt. Dew over them all so....

Blind tests sponsored by whom?

Blind sponsors

Coke’s advertising isn’t “hey this is what Coke is” it’s “hey aren’t you thirsty and don’t you remember how much fun you’ve had in the past while drinking Coke?”

I've never once grabbed a coke because of seeing a commercial. And I barely drink it because I have enough sugar in my life and don't want my kids chugging soda all day long like I did as a kid.

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.

>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.

The only reason you’ve ever drank a coke is because of these ads.

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.

> The only reason you’ve ever drank a coke is because of these ads.

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.

> 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.

You have really loose definitions of advertising. At any rate I’ll say it again, advertising had no effect on me trying or continuing to drink coke. I’m not sure why you’re demanding to be right here on something so simple.

> This isn’t true in all cases. When I first drank a coke I was very young and wasn’t even aware of advertising.

Your parents were. Or whoever it was that bought that coke.

> Then I found I preferred it over Pepsi.

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.

Maintaining a contract with a company is not advertising. It was simply matter of convenience. I could have easily been taken to taco bell and my first soda would’ve been a pepsi.

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.

Coke is only one of their products, they probably need some advertising to promote their other 200 brands: https://www.coca-colacompany.com/brands

This comment sounds like you're getting a piece of that $4bn

Not sure what that is supposed to mean. I'm pointing out that it's a high quality product. There's a reason Coke absolutely dominates everything else out there. I guess to you I'm just a Coke shill though. Ok!

He means the reason you think it's a high quality product is that the $4B of advertising has had an affect on you subconsciously

Which is a pretty silly claim. There are great colas with far less advertisement, but they're small premium brands which cost the same or more. Store brands are typically awful, Pepsi is bad despite their advertisement budget.

Generic brands often don't come in aluminum cans, assuming the industry rumours are true.

I’ve shopped in the US for a few decades. The store brand soda has always come in aluminum cans (in addition to all the other forms of packaging coke uses).

Also, prices for coke in plastic bottles are also up.

Care to elaborate?

I'm guessing parent resides from the UK or Europe. Mostly "own brands" here come in 2 litre bottles

In my European country all own brands are available in cans.

Increase diameter couple of mm and reduce height couple of mm, will that work ?

Of course they are. There was a much-watched video that went around a few weeks ago that composed quite a few CEOs talking about pushing the pricing envelope to take advantage of inflation news (effectively saying: "People now expect price increases, we can leverage that to our gain!").


There's not really much we can do about this. Artificial price ceilings were tried in Venezuela and it only contributed significantly to their massive food shortages they experienced.

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.

I don't know. While price controls may not work in the long run, if businesses believe that there's a time-limited opportunity to raise consumer prices, you could try imposing time-limited controls until the opportunity is over. You might very well end up with lower consumer prices and thinner corporate margins, or at the very least, slow the rate at which the price increases occur.

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.

Most importantly you communicate to investors that your government does not respect the pricing mechanism of the market. That'll make investors worried about which other norms of economic stewardship your regime will violate. The uncertainty alone will be a heavy burden for the economy of a country that decides to impose arbitrary price ceilings on commodities.

There's not really much we can do about this.

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.

One thing we can do is give the NLRB actual teeth to enforce its laws.

I agree that that would be a good thing, but it won't lower consumer prices.

It would create more competition, and put more money into people’s pockets.

Putting more money in people's pockets will not reduce inflation.

I don't see how it will create more competition.

Indeed, putting more money in people's pockets literally increases prices through higher demand.

Putting more money in people's pockets raises inflation, because they're willing to pay higher prices

I think the restaurant industry is going crazy with this. Yesterday I stopped at a food cart. The price of a gyro sandwich was $13. It didn't come with fries. I asked how much for a side of fries. $6. Throw in a drink and add another $2. So a sandwich, fries and drink "combo" is over $20.

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.

That's literally how the market is supposed to work and it's not a bad thing. This is not some conspiracy. Companies price test all the time. They will increase the prices until either the consumer won't purchase their product or a competitor comes in and undercuts them. Sometimes the market conditions favor the consumer, sometimes they favor the company.

The problem is companies are so big and consolidated now that competitors can't as easily come in and existing competitors were bought out.

I'm curious what keeps killing competition and incentivizing the growth of mega-corps over smaller companies?

Then buy generic. This is one way to fight inflation. Coke will get the message very quickly if their sales start coming down.

If you drink neither and choose water, then it'll really come down. Bonus: you'll feel better

And then your medical expense category of the CPI will not go up as much.

That's heretical & anti-consumerism. Be a good citizen: Drink your sugar water, blow up your healthcare costs, increase money velocity. Broken Window Fallacy for the win!

Water is healthier, but not a substitute.

Something like Spindrift is a partial substitute.

A real substitute is Izze. Less sugar, but still sugary. Tastes awesome - better than Coke.


> Water is healthier, but not a substitute.

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...

That's what I do. But I did not want to get too preachy towards the GP poster.

Are you assuming sugar for "feel better"?

I don't drink this kind of beverage, but from what I see in restauration, you don't really have a choice. Most fast-food and restaurant will have the "known" brand and no generic brand, so they will move the cost onto their customer.

Yes, restaurants (at least they used to) partner with either Coke or Pepsi and get things like free signage, etc. in exchange.

>Coke will get the message

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.

Why do you think coke cost what it does instead of $10 per can? The price is what it is because people are willing to pay it. If they don't, the price either goes down or the company goes out of business.

I understand your point on saving money. Switching to cheaper substitutes is accounted for in chained CPI. e.g. If steak becomes too expensive and more people buy hamburger instead this substitution effect is accounted for in the basket of goods. It's very rare for food items to deflate. It's usually a slow monotonic upward march.

I bet some people are buying generic now, and Coke doesn't care, because they've done the math, and have decided that losing a few customers (perhaps only temporarily) is worth the extra revenue generated by the customers who keep buying Coke at the higher price.

Yep, americans aren't nearly as price conscious anymore in general, and there are just so many that are flush with cash now due to cheap money that they still don't care.

If GP comment is right, and the price of Coke has really increased 100%, the sales would have to decrease by half before they were hurt in the profits.

Yeah, but those companies tend to track market share too. They certainly do not want to give generic brands too much air to grow in.

As a Pepsi guy, I can assure you: Coke drinkers will never switch to anything else.

I'm pretty low income ATM and I simply don't buy Coke zero or anything like that much anymore. I drink water, or tea. Loose tea is still pretty economical, even considering water and heating costs.

Yeah, coke can get expensive. I recommend you try cold brew tea, it's almost as refreshing as soda in hot days. You only leave water with tea in the refrigerator at night and enjoy it the next day.

Oh, I didn't knew about that one. I'll try it, thanks for sharing!

I'm surprised to hear house brand cola still exists. My local Giant supermarket no longer ever has any in stock.

I’ve noticed this with many items. Nabisco Premium Saltine Crackers are $4.5 and Publix store brand are $1.5.

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.

Is Pop Shoppe still a thing? http://old52blog.blogspot.com/2011/03/pop-shoppe.html

And bring back the "White Label" groceries from the 80's while you're at it. http://historysdumpster.blogspot.com/2012/08/generic-product...

The biggest crock is the increase in price of sparkling waters. Literally just carbonated water with a squirt of flavor, somehow more expensive than soda nowadays.

This doesn't surprise me much. Most of the cost of these things is the cost of packaging and trucking them around - the cost of the sugar syrup in Coke isn't adding much cost versus the sparkling water. The soda maker might have a more efficient distribution network that allows a lower cost per unit. That, and the customer who's buying sparkling water (instead of buying soda, or just plain bottled tap water) probably is willing to pay more.

That's probably because the people drinking La Croix aren't too price-sensitive. However, if you actually care about buying them with little margin, Costco has em for $0.30/can and Trader Joe's for $0.40.

Prices around here have stayed the same or gone up a bit, but the sales have dried up. You could almost always get Coke on sale at the grocery store for half the "list price" now that's much rarer.

A 20oz bottle is easily 2.29 now compared to roughly 1.79 not long ago.

This price has everything to do with what consumers will pay for convenience and almost nothing to do with manufacturing costs, which are a tiny fraction of that. (Shipping and delivery are probably more, both for energy and labor.)

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.

I remember when it was $1 for almost 7 years, then went to $1.49. It hurt because now you had to feed 2 bills into machines that could barely take 1 reliably, and were always out of change.

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.

As someone who use to drink a lot of coke and quit.. this is very true here (Ontario, Canada) as well.

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


"Food at home" is up 12% year over year. Table A in the link is good reading.

What is inflation if not the capitalists raising prices?

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