[dpflan]

Yes, aware of the flaunted price increases. So inflation going down means the companies balked and have to back down and drop prices? I guess they are keeping the prices as high as possible, but how does the FED influence the company's decision to lower prices (and hence inflation)? Is the incentive to not get sued?

[ska]

> So inflation going down means the companies balked and have to back down and drop prices?

No, it means that the rate of price increases has slowed.

[dpflan]

OK: Inflation as the % increase of a price compared to a previous period, whereby lower inflation means lower % increase of a price compare to a previous period -- 0% meaning prices have stabilized when compared to a previous period? So we get stuck with high prices, the anecdotal comment in this thread seems to give some color to that idea.

Some useful links from the Fed:

- Inflation calculator: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001...

- Recent CPI Summary: https://www.bls.gov/news.release/cpi.nr0.htm

[ska]

> So we get stuck with high prices,

Yes, historically this is how it works. High inflation leads to higher prices which then settle, an higher salaries etc. lag but roughly catch up.

It's more useful to think of inflation as a rate of reduction of the value of money than as an increase in prices. Tools like the CPI baskets are attempts to find a measure of the "real" loss of value, but this is inherently flawed. Tools to affect it (e.g. federal rates, QE, etc.) are inherently ham-fisted and only indirectly coupled to the economic drivers of inflation, so also flawed. Companies take advantage of the variability to be more aggressive with price experiments, etc., etc. - so it's complicated.

And so it goes.

[dpflan]

It is multi-faceted, but maybe it seems not so complicated in that the decision to raise a price beyond a certain point is on the price-setter (right?) and that seems to be a driver of this situation, as you have stated -- using the adage (“profits are an opinion, cash is a fact."), seems like it's an arbitrary decision to make prices move up beyond a certain point...

[ska]

It's not really arbitrary. Some of the underlying costs really are driven by things completely outside of your control (e.g. interest rates knock on effects).

So if your COGS are shifting you have to respond to that, but in most cases price variability is going to cause you problems (e.g. you aren't a financial market, you are selling goods) and your competitors movements are also, so you are trying to strike a balance. And maybe you are bit greedy and see an opportunity in the variability to end user, but maybe you are more worried about collapsing margin.

[dpflan]

I really appreciate your comments and insight, but I must stress again, what has been noted by both of us:

> And maybe you are bit greedy and see an opportunity in the variability to end user, but maybe you are more worried about collapsing margin.

"And maybe you are bit greedy" -- https://www.cbsnews.com/news/retail-price-gouging-lowes-amaz....

And this "profit" is a number derived from an price that is set to attain some difference that is "allowed by the market". Greed is baked in always, else a business cannot continue; but the smoke-screen of inflation is what is discomforting.