Taking into consideration that Demand Destruction has caused prices to fall in non-essential items, causing a false statistical reading on inflation vs deflation, is there a place to read inflation rate of essentials?
Recently, “cheap” drumsticks at one of my local grocers went to $1.69/lb, never seen it that high before.
I think we need to rethink what we are currently measuring for inflation vs deflation to strictly “essentials” so that we can get a leading reading on overall inflation vs deflation movements.
Peter Schiff has some good vids on youtube about how the CPI is a terrible way to measure inflation rate. We’re going to be in for a surprise when the banks start lending all that Fed money.
No one has devised a way to measure inflation or deflation strictly in terms of essentials, but I’d suggest that you check out the Shadow Government Statistics web site (http://www.shadowstats.com/). The site indicates that the CPI is understated by about 7%.
“Essential” to who? Diabetics consider insulin essential. Vegetarians couldn’t care less about the price of chicken. Military girls don’t need dresses and transexuals might consider makeup and perfume to be absolutely essential, without which their person could not exist. OK, some wierd examples in the end there but the point is that the exact combination of goods that each household keeps and considers essential to it’s proper functioning varies from one house to the next.
As has often been pointed out, the only people in a position to calculate a relevant rate of inflation for each household is the people running that household - since only they know which goods are essential to them and which are not. As such, at the same point in time in the same economy, some households that spend lots of their money on some products might be experiencing deflation at the same time as others that spend lots of their money on other products might be experiencing inflation.
Get a spreadsheet and track the price of all the goods that you buy every week. If you don’t ever change brand etc. then you’ll get a reasonably accurate tracking of inflation for you personally (which is the only statistic that could be of any relevance to you). On the other hand, if some items start to get too expensive and you start to replace them with cheaper alternative products or brands, the whole spreasheet is going to start to become meaningless… but there’s nothing you can do about that. It’s impossible to compare apples to oranges.
When it comes to it, the old finger in the air usually tells you which way the wind is blowing though. When the prices really start rising, you know it’s happening. I haven’t noticed any significant “deflation” of late where I live - so I don’t think we’re in the midst of a deflationary recession just yet, even if according to some whacky statistic put out by the BLS concerning the heuristically adjusted price of computer equipment that I really should be thinking otherwise.