[StatsAreFun]

For those that do not believe the consumer prices are that bad or have increased that much, take a look at this historical graph from the official BLS.gov website[0]. Over the last 10 years the Consumer Price Index (CPI) has been holding steady at around 2%. This year we've doubled that. How about going back 21 years? Nope, the CPI still fluctuates around 2% give or take. The last time we saw a consumer price index value this high or higher was 30 years ago!

I was a teenager the last time we had a CPI this high so for all of my adult life it has been a fairly consistent metric to factor into my household budgeting. Now I'm forced to make conscious decisions on how to prioritize my family's spending. To me personally, this is a big issue.

So, while I appreciate the perspective people have that try to look at the bright side of these numbers, we must admit - regardless of one's political leaning or optimistic outlook - consumer prices have risen to the highest amounts in three decades.

[0] https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=p...

[lom888]

>The last time we saw a consumer price index value this high or higher was 30 years ago!

Yes, but from 1968 until 1991 there were 24 months out of 276 when the CPI was lower than today. Perhaps what is remarkable isn't that inflation is so high today, but that it has been so low for so long.

[bko]

What if prices didn't go up, but down reflecting a more productive prosperous society?

Imagine everything getting cheaper every year. Every year you'd see your rent and food bill go down. No more arguing about bumping the minimum wage or the middle class being left behind. Everyone would get richer by default.

Of course this is highly unpopular with economists. They'll tell you no one would buy anything if things got cheaper. But some things do get cheaper every year, mainly technology. You can wait a year and buy that new TV you want at a 10% discount, but that doesn't stop us from purchasing it today.

But of course stopping inflation would mean not printing trillions of dollars and giving them to large banks, so obviously thats a no-go

https://www.covidmoneytracker.org/

[dragonwriter]

> Of course this is highly unpopular with economists. They'll tell you no one would buy anything if things got cheaper.

No, they'll tell you that minor sector-specific disruptions that would, in an inflationary economy, be met with localized temporary real pay cuts via static nominal wages instead (because of the psychological difference between nominal pay cuts and static pay, even if the real pay change is the same) be met instead with massive job losses with ripple effects throughout the economy in a deflationary system making the economy more volatile, with deeper more frequent downturns, and more painful transitions as demand shifts across sectors.

Deferred purchases is more of a concern economists have with transitory deflation than persistent, planned, systemic deflation.

[whimsicalism]

Ah yes, and the real price of your mortgage and student loan payments would go up every year, sounds like paradise.

[bko]

How do you figure? Homes would go down in price, but your mortgage would stay the same. It's kind of like how people finance cars, even though the value of their car is going down while they're paying down the price of a brand new car.

[dragonwriter]

> How do you figure?

Assuming amortization with fixed nominal payments, the real (adjusted for CPI) price if the payments goes up over time with deflation, because the buying power sacrificed to the payments increases.

[whimsicalism]

In a deflationary environment, the real amount oustanding on your mortgage goes up.

[jbay808]

Perhaps, but likewise the home itself is likely to be much cheaper and so a smaller loan is needed, if any.

[whimsicalism]

You can't just get a smaller loan every year.

[wil421]

How much of this is due to supply chain issues? Your linked graph already went down a bit. My butcher and managers at my grocery store blame their suppliers staffing issues due to Covid. Pork went way up early on due to Covid. What happens once more companies enforce vaccination policies?

[whimsicalism]

To me, the evidence is that much of the inflation remains due to supply chain issues.

If you look at things like shelter, which shouldn't be impacted by supply chain, the prices are up - but still substantially below what they would be based on the pre-pandemic trend.

[StatsAreFun]

That's a good question and I would have to defer to an economist or someone better trained in these issues to say one way or another for sure (or maybe even "yes, but..."). My armchair opinion is the supply chain issues definitely have an impact just like how the 42% increase in fuel prices have a downstream effect on the fuel prices which affects the supply chain, etc etc...

Some follow-up questions that immediately come to my mind are: (1) How does the average U.S. consumer think about supply chain questions? (2) How much more are the prices felt by the average U.S. consumer if I'm feeling them at my income level? (3) Will this translate to a shift in a more fiscally conservative mindset by voters in the upcoming round of elections?

I've not seen any hard numbers but I would assume that the average HN reader (like my spouse and I) are more educated and earn more money than the average U.S. consumer. Please correct me if that is wrong, though! Going with that assumption however, my gut tells me that while we are relatively insulated from these CPI/inflation increases, the average consumer isn't and the financial impact to the average consumer is more of an existential threat. However - and this is not a knock on anyone at all because I really enjoy discussing supply chain questions too - I'm getting concerned that the majority of people in the country less fortunate than me do not have the luxury/privilege to have the same discussions. Since, at this point, these types of questions and discussions could probably be fairly be classified as academic at our level, it's very much real and not academic to those less fortunate.

But please forgive that moralizing tangent! Just typing out these questions, concerns and thoughts as they come to me while I'm sitting here having my second cup of coffee and getting through my first round of meetings for the day. Hopefully nothing I said offended you or anyone else here and might even stimulate further conversation and fresh viewpoints or perspectives on these issues. :)

[paulmd]

At the end of the day, there are two underlying problems, I think.

One is that the supply chain and shipping world is just completely bottlenecked and screwed up, some of it is COVID related disruptions (airlines not flying for a long time, shippers/dock workers not working, etc), some is residual shocks from the Ever Given (which pushed a massive "bubble" into the normal flow of containers/etc - which is creating weird paradoxical effects all across the supply chain as it suddenly becomes very important or not important at all to hustle on specific parts of the chain), etc.

The other is that we just killed 700k people in the US alone, a disproportionate number of whom were "frontline" workers - the people at your grocery store and fast food places. Yeah a lot were seniors but of the ones who weren't, a ton of them were frontline workers. And that's just creating a massive labor shortage. In a sense this is also a preview of what the "send 'em home" policies certain political groups push for would look like.

Vaccination policies are another log on that fire but frankly I don't think it's the grocery store workers who are the ones digging in their heels about getting vaccinated, it's the karens who are their customers. I think it's a comparatively small effect compared to the above two, but it's still yet another compounding effect.

The supply chain was very "just in time" and disruptions to that supply chain can have surprisingly long-term effects before the ripples finally smoothed out - even if COVID had disappeared you are probably talking "at least several years" to return to normal, in the global shipping chain, and in certain long-leadtime supply chains like electronics. And really we are not even past the part where ripples are still getting created, due to the general labor shortages. Again though, we tell workers to have a 6 month supply of all expenses just in case "something unexpected" happens, and yet these JIT policies have been the darling of the business world. This is the downside, something big happens and they don't have any slack in their production chains. The companies that planned ahead and had a "6 month emergency supply" of computer chips aren't having problems as bad as the companies who were living paycheck-to-paycheck (or supplytruck-to-supplytruck).

[nradov]

That is misinformation. According to the UFCW union, 456 of their 1.3M members have died of COVID-19. While those deaths are tragic, it's only 0.04% and had no significant impact on the workforce. To put it in context, the COVID-19 death rate for grocery workers is actually lower than the US population as a whole. And many of the workers who died were infected outside the workplace.

https://www.supermarketnews.com/issues-trends/grocery-worker...

I encourage everyone to get vaccinated if they can, but vaccinated customers also transmit the virus. There is only a limited and temporary reduction in transmission risk.

https://www.nature.com/articles/d41586-021-02689-y