Prices vs. Inflation Statistics

Over the past year or so, more and more Americans have been complaining about inflation, yet, on the surface, the usual statistics don’t seem to support those claims. But that’s only on the surface.

In September 2023, prices had increased by 3.7 percent compared to September 2022, according to the 12-month percentage change in the consumer price index, down from a monthly high of 9.1% in June 2022.

The problem with the statistics is that they only show the rate of price increases, not the comparison of real prices. For example, in October of this year food prices were up “only” 3.7%, but what that doesn’t reflect is the real pocketbook impact. The average cost of a pound of bacon was $5.34 in March 2020; today it’s around $7.25. That’s a 36% increase in two and a half years.

Gasoline prices have bounced around over the past three years, but even with recent price decreases, gasoline prices per gallon are 42% higher than three years ago.

For people who were already having trouble making ends meet, dealing with price increases often results in more credit card purchases. In March of 2022, the interest rate on the average credit card was 14.6%; today it’s 21.2%. With a credit card balance of $8,000 (the national average), the additional monthly interest expense is almost $50, or $600 annually.

At the same time, Americans keep racking up bigger credit-card balances. In the third quarter, the country’s credit-card debt burden hit a new record high of $1.08 trillion, according to the Federal Reserve Bank of New York. That was up $154 billion from the same period in 2022, the biggest year-to-year jump since the Fed started collecting the data in 1999. So, it’s scarcely surprising that, according to a national survey by WalletHub, 56% of all Americans say they have more credit card debt than they did 12 months ago.

All that has created, as the polls reveal, both a growing concern by most people about price increases and, apparently, a lack of understanding, particularly by Democrat politicians, who are looking more at the wrong statistics.

4 thoughts on “Prices vs. Inflation Statistics”

  1. Chris says:

    That seems to be saying that the real problem is, even though inflation is moderating, the increases over the last 3 years have finally caused people to burn through their cash reserves and they are really feeling the pinch now, whereas in 2021 they were just astounded by the increases but (most) didn’t need to adjust their habits because they had cash reserves at the time.

    I’m not sure what the real fix it, because getting prices back to where people are used to them would require substantial deflation, which has never been good for the people overall.

  2. Mayhem says:

    This is one of those things that always baffles me. Modern economic thought holds that money should always inflate at a slow but steady rate, because that way the value of debt will always be lower over time.
    Deflation is anathema, because debt would increase, which means people won’t invest (and more practically it would hurt debt holders).

    But the actual economic evidence is that people won’t invest *anyway* – after years of QE, the big funds and tech boys are bloating with cash and they won’t put it anywhere.

    And the big problem with inflation is that the rise in wages for 90% of workers lags significantly behind the rise in cost of goods. Or in other words people don’t get paid enough to live on the new costs.

    Effectively it’s a constant transfer of wealth from income to debt, gambling as it were that things will always stay just ahead of collapse. Hyper inflation is where the cards fall over, and economies collapse.

  3. Tom says:

    In the 1940’s I was raised with the economic outlook that you cannot buy anything if you do not have the money to pay for it. Oh credit was ok: if you had saved the money to pay for the item when demanded. She Who Must Be Obeyed suffered through decades because of this fault in my character but we never came close to owing our lives to the company store! Despite my feeling that it is patently obvious why in the US there is no way for the Have-Nots to climb financially, I still cannot understand the US Haves characteristic of living in debt.

    Economically and practically Price seems important to the Have-Nots, where as Inflation is important to the Haves.

    This article goes into the economics argument and is just as relevant now as it was in 2009.

    So what is so hard for the Democrats with their support from the Have-Nots to understand “ Living Within Your Means”?

  4. Grey says:

    The Democrats really need to clean up their messaging on the economy. The Obama frat boys at Pod Save America have been hammering on this for a while: you can’t tell people that inflation is fixed or solved as it comes off as condescending elitism that the person is just too dumb to understand how the economy works. Namely, because it flies in the face of all individual voters having gas tanks, wallets, and eyeballs.

    Voters do respond, in polling focus groups, to being shown the contrast between economic policies favored by Democrats, versus those favored by Republicans.

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