The No-Inflation Con Game

I don’t know who’s computing the Consumer Price Index that shows the U.S. has low inflation, but their computations don’t square with my real-life experience. The filing cabinets brought it home to me, once again. Somewhere around ten years ago, I bought a legal size, two drawer, black steel filing cabinet. Last week I brought one almost identical to it, from the same big box office supply company from which I’d bought the last one – except for the price, which was almost exactly double what I paid for the one I purchased ten years earlier.

According to the U.S. Consumer Price Index, the inflation rate over the past ten years has been 25.5%, or just a shade less than 2.0% annually. The change in the price of the filing cabinet represents a rate of inflation at 8% annually, or four times the official rate. The majority of that increase is likely due to the fact that the cost of iron has almost quintupled since 2004, but by that logic, anything manufactured out of steel or iron should have increased markedly over the last ten years – far more than the 2% per year official inflation rate. Interestingly enough, over the same period the price of copper has tripled, while lead and tin are 2 ½ times what they were in 2004.

Housing prices are, overall, about the same as they were in 2004, although in some areas they’re still below 2004 levels and in others, such as Denver and Honolulu, they’re more than 20% higher. This year, one of the biggest factors holding down inflation has been the decrease in gasoline prices – except that’s just for the first nine months of this year – and gas prices are still almost double the average of ten years ago.

Then, too, the CPI has the price of men’s shirts as going down. If that’s so, why do my shirts, bought largely at sales or discount houses, but the same modest brands as I’ve worn for at least fifteen years, cost twice as much as they did ten years ago?

As for milk, its price has almost tripled since 2004, but I will admit that the cost of computer printers has definitely gone down – as has their service life – while the cost of ink and toner have gone up, again roughly double what they were ten years ago. A ream of paper now costs more than twice what it did ten years ago. My work boots have increased more modestly; they cost only 53% more than they did ten years ago.

Now, one of the ways economist discount/minimize increased prices is by factoring in “product improvement,” which definitely makes sense in some areas. There’s no doubt that cars are safer than ever before, but that improvement comes at the much higher cost for repairs of dents and dings. Several years ago, my daughter’s thick-skulled canine Woofie [short for Beowoof (intentional name pun)] side-swiped the front quarter-panel of an almost parked Volvo moving at perhaps 2 mph. Woofie got a headache and lived happily on for several more years. The damage he inflicted on the nearly new Volvo was close to $1500. Crumple zones don’t care what hits them. I also seriously doubt that this kind of cost, which certainly drives up the costs of maintaining a vehicle – and the cost of insurance – is accurately factored into inflation calculations.

While I really can’t discern any “improvements” in paper, shirts, boots, and filing cabinets, as a former economist, I can certainly note, while not exactly appreciating, the ingenuity of government economists in measuring inflation rates, in what I personally believe is a statistical con game.

5 thoughts on “The No-Inflation Con Game”

  1. Lawrence says:

    … and while the price of hard copy books has increased, it hasn’t done so to near the same degree while average price for a book (thanks to electronic format) has actually decreased.

    It’s interesting that we’ll complain but willingly pay more for a “functional” product but are less willing to give that same consideration to music/literature/pastimes whose value to us is more dependent upon our own perception rather than franchised marketing.

    Farley Mowat (in one book) observed that the difference between Soviet Propaganda and North American Propaganda was that we believe ours because private corporations do a much better job of selling it.

    I wonder are we having the ability to make discriminating choices trained out of us by the sea of advertising which presents many (but not necessarily the best for the consumer) options to us without the effort of having to find them ourselves? How many better value products never see the light of day because they don’t have the marketing budget to break into our conciousness? How many of those businesses aren’t around any more as a result?

  2. Corwin says:

    I have read here in Australia that the single largest impact on the CPI is actually the cost of Food. I don’t have any stats for America at my fingertips, but I can tell you that most food items here have more than doubled in the last 10 years, while some like bread have nearly tripled. The problem, for most people, is that wages/salary have NOT increased by the same proportion.

  3. Tim says:

    Inflation is only one factor. Market demand and scarcity is another. I was told that the reason why butter has become so expensive in the UK is that the new elites of the rapidly growing economies of China and India are demanding “Western” produce and so the price of milk powder has rocketed.

    I doubt this extends to filing cabinets however. Mind you, I now only store paper records for tax purposes, so one cabinet suffices. Everything else is held electronically – including my library:)

  4. Jim S says:

    While my pay rate has indeed stayed the same for a few years now (and I’ve been fortunate that it’s only a few; I know colleagues who are nearing on a decade without a raise)… my money certainly isn’t going as far. I freely admit some of that is my own fault (debt) or the result of having a family rather than being single… much of it is the simple fact that the prices of things have not remained the same. And, in some cases (like health care), I’m actually paying more and getting less. (Thanks, Mr. President. The ACA is really working out well for me…) It’s currently looking like my employer’s next budget cycle is not likely to include much, if any raises. Meanwhile, we’re anticipating 15 to 20 percent increases in insurance costs. (And that’s before they tax some benefits that haven’t been taxed in the past…) So… we’re actually looking at a net decrease in take home pay.

    But the propaganda economists say that there’s little or no inflation.

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