[lettergram]

1. There are things like “shrink-flation” not captured. I’ve noticed most packaged goods have reduced in size 10-20%. Eggs have more than doubled, milk is up 25%, etc

I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down.

2. Fuel is only down because the US has used its strategic reserve to increase supply. At the same time demand dropped dramatically, with China lockdowns & increased prices forcing manufacturing / transportation to cease. Now the election season is over I suspect the strategic reserve will stop being drained; further if price caps work on Russia… we will see a massive reduction in the global fuel supply (Russia will just stop pumping as its unprofitable).

[dahfizz]

> There are things like “shrink-flation” not captured

I hear this everywhere, but as far as I can tell its a complete myth. The "basket of goods" that CPI is based on does keep track of changes in quality and quantity of the goods.

> If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a container of orange juice containing 59 ounces instead of 64 ounces) of the good or service since the last time prices were collected, the data collector selects a new item similar to the old item. This is referred to as a substitution.

> When substitution occurs, the commodity analyst reviews the new item and price. The new price may be quality adjusted for use in index computation. Conceptually, the CPI seeks to be a constant-quality measure, though accurately quantifying quality change may not always be possible. Detailed information about quality adjustment procedures is in the calculation section.

https://www.bls.gov/opub/hom/cpi/data.htm

[roywiggins]

> much of the increase occurred in 2021 - it just never came down.

That's not actually in disagreement with the notion that inflation has come down a lot.

(for prices to come down you'd need deflation)

[NikolaNovak]

This is a key point and massive misunderstanding in everybody I know : there's this expectation that when "inflation slows down", then "prices will return to normal". But that's empathically not what it means.

If prices rose whatever percent last 18 months, and inflation drops to zero tomorrow... Prices will stay exactly the same. They just won't increase further day to day any more (at zero inflation).

"Inflation is still high, I know that because prices are still up compared to before " is a logical error.

[lettergram]

The real struggle is the government - fed, treasury, etc all claimed the inflation was “transitory”. A lot of people have been caught off guard. Aka people expected a deflation.

I was pointing out most of the increase the last 3 years occurred in 2021. I actually believe 2022 has far higher inflation than they claim in government figures. At least locally, it’s higher based on my tracking.

2023 will be worse for food due to fertilizer issues, I suspect fuel prices will also increase. Effectively, expect more expensive commodities. That said I’d suspect housing and other goods being kept up with loans to decrease.

For fertilizers - it takes ~10 years to get potassium online, for instance. The other chemicals take 3-5 years, so we shall see how this goes.

[dragonwriter]

> The real struggle is the government - fed, treasury, etc all claimed the inflation was “transitory”. A lot of people have been caught off guard. Aka people expected a deflation.

The prediction that inflation spike was transitory (which was universally abandoned anyway) was not a prediction of a rapid return to past prices, but of a rapid return without significant policy intervention to normal rates of inflation.

> At least locally, it’s higher based on my tracking.

Local inflation tends to differ from the national average one way or the other, and I doubt your tracking is anywhere close tonas comprehensive and systematic as any of the major federal government inflation measures.

OTOH, the PCE—which is what the Fed uses to guide police decisions—during the spike has jumped higher than the CPI and came down slower, so “the CPI has understated recent inflation” is part of the premise of recent monetary policy.

[ceejayoz]

> fed, treasury, etc all claimed the inflation was “transitory”

That is precisely what "Core measure rose 0.3% in December" means. The period of high inflation is (apparently) over. The price increases that inflation generated will tend to stick around.

[roywiggins]

Inflation went up and then fell back down. It did involve more fed intervention than had been predicted! But it did come down.

That seems to qualify as "transitory" inflation to me, as opposed to persistent inflation that doesn't abate.

[pwinnski]

1. Nobody is saying that there has been deflation, so yes, prices that have gone up will remain up. The old baseline, the one in your head, that's gone. The question now is will prices keep going up, and the answer seems to be no.

In addition, a series of issues unrelated to monetary policy have hit individual items like eggs (avian flu) and lettuce (INSV) and so on, because food is messy.

2. The election season has been over for two months, and yet the SPR is continuing to contribute to US supply[0], so apparently not everybody thinks solely in election terms.

Russia is more complicated; they are at least as focused on their limited opportunities to earn and spend money given sanctions as on hurting us, which they might see as less easy to do now that the election season has been over for two months.

0. https://ycharts.com/indicators/us_ending_stocks_of_crude_oil...

[throw0101a]

> 1. There are things like “shrink-flation” not captured.

Poppycock. From StatCan, who do the CPI numbers in Canada:

> 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time.

* https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019...

> 2. Fuel is only down because the US has used its strategic reserve to increase supply.

Fuel is down in Canada as well, which has no strategic reserve. Or it could be because geopolitical events have stabilized a bit and global oil prices are down:

* https://fred.stlouisfed.org/series/DCOILWTICO

[cableshaft]

> Though, to your point, much of the increase occurred in 2021 - it just never came down.

Yeah, the data is inflation going down (and not to negative values) year over year, not prices going down. Just means prices are inflating slower, not going negative.

And shrinkflation has been around for decades. It was a thing even when inflation was at 'normal' 2% levels.

Edgar Dworsky is the guy that all the media companies bring on as the expert on shrinkflation (just look up his name, pretty much all news sites have articles about him), has had his blog up pointing out all the instances of shrinkflation since as far back as 2006[1].

[1]: https://www.mouseprint.org/

[sf_rob]

RE 2: As far as I can tell the last strategic reserve sale occurred in mid-November with no sales in December / bids for repurchases being solicited. It's possible that the supply effects continued through December, but it seems a bit tenuous without economic modeling.

[lettergram]

It takes time for a sale to hit the market. I believe the last sale (or second to last) had a several month delivery window.

That said, fair enough - it’s really hard to predict commodity prices at a global scale. China locked itself down which cut its usage, for instance.