Quote:
Originally Posted by teomaxxx
The core rate excludes the prices of food and energy, which can be volatile from month to month. Factor them in, and inflation is about as moderate as Newt Gingrich. In the first eight months of 2007, the consumer price index?the main gauge of inflation?rose at a 3.7 percent annual rate. That's more than 50 percent higher than the mild 2.3 percent core rate. The prices of energy and food are soaring, at 12.7 percent and 5.6 percent annual rates, respectively, and have been doing so for years. As a result, the CPI?including food and energy?has risen 12.6 percent since July 2003, for a compound rate of about 3 percent.
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I don't know why you bother quoting ANY government numbers whatsoever, since you think the government is lying about all economic statistics. (except for the ones you think prove your point of course...THEN they're telling the truth)
The government publishes 2 inflation numbers.
Core Inflation (the number the fed looks at most closely) does not include food and energy prices. The reason is that these two sectors are very volatile and are affected by many factors outside of the fed's control. (a drought could affect food prices, and OPEC could raise oil prices, and nothing the fed does with interest rates would change that)
Also, higher food prices and energy prices tend to be counter-inflationary. I know that statement doesn't make sense on the surface but please read on.
Energy (electricity, gasoline etc) and Food are absolutely necessary for people to survive. No matter what the price is, people will still buy them.
Therefore, when the price of oil goes up, people have to spend more money on energy, and have less to spend anywhere else.
So the higher oil prices work like a tax, draining customers pocketbooks, and all of the other sectors of the economy have to fight with each other over the few dollars the average consumer has left.
They can't raise prices because consumers have very little discretionary income left. Oil prices go up, but the overall basket of goods that the average consumer purchases costs the same.
The other inflation number the government reports is headline inflation. This number DOES include EVERYTHING. It's not the number the fed focuses on when deciding monetary policy, BUT THE GOVERNMENT DOES REPORT IT.
According to your article I quoted above, since July 2003 that number has been 3% per year. That's hardly runaway inflation by anyone's standards.
While it's true that the prices of SOME THINGS have risen rapidly, there are prices of several other things that have gone down (flat screen tv's, cell phone minutes, automakers slashing prices etc)
You have to look at the overall basket of goods to determine if there's inflation. Quoting prices on a handful of items that have gone up is hardly proof that inflation is rampant in our economy.
