(Schiff)—Inflation is dead! At least that’s what you would think if you listen to government officials and talking heads in the financial media.
So, how is this victory over inflation working out for the average person? Not so great.
Based on official CPI data, price inflation has cooled somewhat, although it remains far above the Federal Reserve’s 2% target. That hasn’t stopped President Biden and most of the mainstream financial media from declaring victory over rising prices. Biden even suggested that companies should start cutting prices since inflation is falling.
It’s important to remember that even if we believe the government numbers and price inflation is cooling, that doesn’t mean consumers are getting any relief.
Prices are not falling. They’re just going up slower than they were six months ago.
And those price increases are cumulative. Since January 2022, prices have risen 9.7% based on the CPI. And the CPI is designed to understate rising prices.
In other words, we’re all still coping with much higher prices no matter what the latest CPI report says. And the suffering is far worse than sterile BLS reports indicate.
This becomes clear when we go out in the real world and stop listening to news people spouting government numbers.
Ironically, we can learn more about the actual impact of inflation from the movie Home Alone than we can from some guy on CNBC droning on and on about the CPI.
In this 1990 classic, 8-year-old Kevin McCallister’s family went on a holiday trip to Paris and accidentally left him alone in his house. Chaos ensues.
You may recall that after realizing he’s alone, Kevin makes a trip to the grocery store. After all, a kid has to eat.
Kevin bought a basket full of groceries including a half-gallon of milk, orange juice, Wonder Bread, a Stouffer’s frozen turkey dinner, toilet paper, Snuggle dryer sheets, Tide liquid laundry detergent, plastic wrap, Kraft macaroni and cheese, and a bag of army men. He paid a grand total of $19.83 with a $1 off coupon for the orange juice.
In 2022, that same basket of groceries would have cost around $44.40 based on a shopping trip by a West Virginia mother. That’s a 123.9% increase. (Keep in mind prices vary somewhat depending on the store and location.)
This year, Kevin would have to fork out a whopping $72.28 for his provisions at a Chicago store. That’s another 62.8% increase in just one year. Since 1990, the price of Kevin’s groceries has gone up over 264%.
So much for that 3.1% CPI.
This just goes to show that real-life price inflation is far worse than the official numbers indicate.
