US consumer prices tick up just 0.1 percent last month despite big gain in energy costs

Associated Press ^ | 20 Feb 14 | CHRISTOPHER S. RUGABER

[Black Agnes]

I see you’re in MN. Can you afford to cook the bacon you found on sale? What with propane costs and this insane winter?

[TurboZamboni]

I'm not on propane. I have natural gas.

Especially after eating bacon.

[Black Agnes]

LOL.

Hey, at least you don’t have to rely on a solar cooker up there.

[1rudeboy]

Ok, let's back up. Your comment:

In the meantime, food has doubled, but it doesn’t get counted, and as Organic Panic has pointed out, the government counts “packages” for so many items, and the manufacturers make the packages smaller but keep the price the same. IIRC, I had to get a bag of sugar recently, and the old 5 pounder is now a 4 pounder....but, I’m just a tin foil whiner, that’s not a price increase. /sarc

fundamentally is incorrect.

[xzins]

Are you saying that chuck roast wasn’t 2.89 and now is 4.89 2 short years later? Are you saying that the 5 pound bag wasn’t smaller?

[1rudeboy]

What I'm saying is, is that a pound of meat is a pound of meat, and a dozen eggs is a dozen eggs with regard to the calculation of the CPI.

You are saying that a producer shrinking the size of its package affects the above, and that is incorrect. Just as the assertion that consumers substituting chicken for beef when beef gets too expensive affects the calculation of the CPI is incorrect.

[xzins]

We’re talking meat and eggs when organic panic was talking packaged items like ice cream.

[1rudeboy]

And that comment fundamentally was incorrect, also . . . just as your comment was.

[xzins]

Did you have a favorite?

[1rudeboy]

Definitely. Yours.

Dense. Like a neutron star.

[xzins]

Which one?

[1010RD]

http://www.aei-ideas.org/2013/01/is-the-us-government-wildly-understating-the-inflation-rate-no-it-isnt/

That’s by Jim Pethokoukis a year ago. What’s hitting us in the eyes is the inflation in food and energy which we’re most sensitive to. It’s a pretty good explanation, but those families that are marginal are facing higher costs are the largest parts of their budgets outside of housing itself.

[1rudeboy]

I refer you to my comment #44.

[GeronL]

consumer prices?

not counting food and energy?

How would you not count those?

[VerySadAmerican]

I can make those clothes last a little longer. I can keep that car a few years longers. I can stop travelling. But I have to pay for energy. This is all a fraud.

[familyop]

Time for some conversions, eh?

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Rocket Stove Heater Part 1 of 3
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WORKSHOP ROCKET STOVE HEATER part1
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Home made gas bottle wood burning stove test 1
http://www.youtube.com/watch?v=P4m2CWO8NlM

How to make a wood burning stove DIY project
http://www.youtube.com/watch?v=g44xtJ0AhXg

[khelus]

As I understand it, food is “volatile”, so they don’t count food in the new improved cpi with the weight it used to have.

In the meantime, food has doubled, but it doesn’t get counted, and as Organic Panic has pointed out, the government counts “packages” for so many items, and the manufacturers make the packages smaller but keep the price the same. IIRC, I had to get a bag of sugar recently, and the old 5 pounder is now a 4 pounder....but, I’m just a tin foil whiner, that’s not a price increase. /sarc

When the news or the Fed cites the CPI, they are citing core inflation.

Core inflation has had the cost of food and energy removed in order to smooth out the CPI or remove volatility. This removal of volatility assumes the prices goes up and down not up and up and up.

Of course this means core inflation does not represent inflation as it is experienced by the general population.

In addition core inflation is used to evaluate how well the fed is doing in one of its mandates - stable prices. Isn't that convenient ?

The CPI has been changed from reflecting the cost of a set standard of living to reflecting the cost of a declining one. The tools used to achieve this include weighting and the chained CPI.

So if you aren't worried about the price of the essentials of energy and food, and about maintaining a set standard of living the CPI says every thing is hunky dory.

OTH if you want to see what the CPI would be if measured as it was before 'enhancements' seriously affected it, look at the blue line on the chart below.

[khelus]

RE:consumer prices?

not counting food and energy?

How would you not count those?

http://www.freerepublic.com/focus/news/3125076/posts?page=57#57

[Toddsterpatriot]

Love that phony graph!

[khelus]

Chained CPI calculates inflation based on moving goal posts.

Here is a rough example of how the concept works:

Cost of one widget
Jan 10.00
Feb 10.10
Mar 10.20
Apr 10.30
May 10.40
Jun 10.50

non chained inflation in Jan $
Jan
Feb .01 .10/10.00
Mar .02 .20/10.00
Apr .03 .30/10.00
May .04 .40/10.00
Jun .05 .50/10.00
In June the price of one widget has increased by .05 or 5%

chained inflation, inflation is chained to the prior month
Jan
Feb .01 .10/10.00
Mar .01 .10/10.10
Apr .01 .10/10.20
May .01 .10/10.30
Jun .01 .10/10.40
In June the price of one widget has increased by .01 or 1%

This concept allows the government to suppress the COLA.