Friday, May 20, 2011

What inflation?

Great post at the Business Insider regarding all the deflation going on. With everybody sweating the soaring prices for energy and food, nobody seems to notice the deflation in housing and transportation. Not to mention that labor costs have been kept relatively flat.

Just because your paying more at the pump, doesn't mean that your paying more for every item.

The post has some great charts and their is nothing greater then viewing the real numbers and comparing them over the last 20 years. Even the new vehicles prices have risen the last couple of years, but they are still lower than 2003.  If an item has jumped off the 2008 lows, does it really count as inflation. And thats the biggest crux with the inflation numbers now being reported. Don't compare them to the last couple years. Compare them to 2006-07.

Maybe the most interesting chart is the household furnishings one. That category is below the lows after the dot com bust.




whats-actually-in-deflation.png



Check out the site for the other declining categories. Inflation isn't as rampant as most think. With housing, transportation, and natural gas plunging, its hard to understand the big inflation fear. Besides, if the government would every decide to quit burning our food via ethanol the food inflation might just disappear. 





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