Personal Finance

What's wrong with the official inflation figures

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  • Oct 22nd, 2020 10:52 am
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Jan 21, 2018
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What's wrong with the official inflation figures

You may have been noticing that the price of stuff you buy is rising much faster than the official inflation figures. Economists have been noticing that too, and have some analysis of why those numbers are increasingly misleading, and how it may be sending the wrong signal to investors.

https://www.cbc.ca/news/business/inflat ... -1.5765625
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Nov 15, 2004
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The inflation figure has always been a lie. The government keeps it artificially low to enable wage suppression and keep carrying costs low for property owners. An accurate inflation figure would require things to actually change, and no government run by any party here wants that.
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Oct 7, 2007
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Poutinesauce wrote: It's always been ridiculously misleading, it's nothing but a cover up to hide how bad things are. The stats do not include much of the basic goods that people cannot go without, especially food items.
True. And why including the ever-increasing cost of housing. Renters and homeowners are both being squeezed.
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Jan 2, 2015
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choclover wrote: And why including the ever-increasing cost of housing. Renters and homeowners are both being squeezed.
This is the biggest problem with the official numbers.

I don't know how they would deal with homeowners, however. People who lock in their mortgages early will not see further increases, but the newer generations of homeowners will see massive, far-above-inflation (and income growth) increases. I wouldn't include the value of the house in inflation, but instead the monthly mortgage cost. This will include a mix of older people paying far less and younger people paying far more.
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Dec 20, 2018
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Scote64 wrote: You may have been noticing that the price of stuff you buy is rising much faster than the official inflation figures. Economists have been noticing that too, and have some analysis of why those numbers are increasingly misleading, and how it may be sending the wrong signal to investors.

https://www.cbc.ca/news/business/inflat ... -1.5765625
I noticed price of stuff I buy is a lot lower as well. Inflation or the basket of goods in cpi is just general approximation and will be different for everyone
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Dec 20, 2018
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FoFai2015 wrote: This is the biggest problem with the official numbers.

I don't know how they would deal with homeowners, however. People who lock in their mortgages early will not see further increases, but the newer generations of homeowners will see massive, far-above-inflation (and income growth) increases. I wouldn't include the value of the house in inflation, but instead the monthly mortgage cost. This will include a mix of older people paying far less and younger people paying far more.
Well housing costs keep dropping because of low interest rates, so while purchase price increase, monthly costs aren't increasing to same extent or even decreasing
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May 16, 2017
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Poutinesauce wrote: It's always been ridiculously misleading, it's nothing but a cover up to hide how bad things are. The stats do not include much of the basic goods that people cannot go without, especially food items.
Complete nonsense. Have you ever gone to look at the detailed data - it includes a broad cross-section of food items.

The biggest issues with inflation stat's is that too many people have no actual interest in the statistical analysis and methods used by Stats Can and make claims based upon the latest rumour they heard while filling-up at the gas station or having a beer at the pub.
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robsaw wrote: Complete nonsense. Have you ever gone to look at the detailed data - it includes a broad cross-section of food items.

The biggest issues with inflation stat's is that too many people have no actual interest in the statistical analysis and methods used by Stats Can and make claims based upon the latest rumour they heard while filling-up at the gas station or having a beer at the pub.
That must be why it costs so much more every single year to buy groceries. But never mind that, the pencil pushers at Stats Can have spoken. We're just imagining the numbers on our grocery bills for meat and for vegetables, and for whatever else.
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Poutinesauce wrote: That must be why it costs so much more every single year to buy groceries. But never mind that, the pencil pushers at Stats Can have spoken. We're just imagining the numbers on our grocery bills for meat and for vegetables, and for whatever else.
Quite possibly.. or your grocery habits tend towards a basket that is weighted in a way that has become expensive, for you specifically.

My grocery bills are pretty much constant, at the aggregate level, over the last 10 years..
As someone long prepared for the occasion, in full command of every plan you wrecked---
Do not choose a coward's explanation, that hides behind the cause and the effect...
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hoob wrote: Quite possibly.. or your grocery habits tend towards a basket that is weighted in a way that has become expensive, for you specifically.

My grocery bills are pretty much constant, at the aggregate level, over the last 10 years..
Find flyers from 5 years ago and you'll see that "inflation figures" are a total joke.
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Poutinesauce wrote: That must be why it costs so much more every single year to buy groceries. But never mind that, the pencil pushers at Stats Can have spoken. We're just imagining the numbers on our grocery bills for meat and for vegetables, and for whatever else.
Statscan breaks things down by category. All items CPI has averaged 1.8% since 2002 (37% over the 18 years). Food CPI has averaged 2.4% (54% over the 18 years). To make up for it, clothing and durable goods have gone down by an average of -0.5% since 2002 (-8% over the 18 years).
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Poutinesauce wrote: Find flyers from 5 years ago and you'll see that "inflation figures" are a total joke.
No need to go back 5 years ago. Since COVID, it has been easier to see food prices inflating. Not a huge amount but enough to notice. And then add that to most items in your cart and it starts to add up. I understand that COVID might make things unsual but I also know that prices seldom go down but instead become the new normal. We did better with our vegetable garden this year and plan to do more next year. If real inflation takes off given all the weird stuff going on right now with the financial side of things, I don't want to feel like I am being "forced" to pay $12 a head for cauliflower like we did a few years back.
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Jun 26, 2019
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Poutinesauce wrote:
That must be why it costs so much more every single year to buy groceries. But never mind that, the pencil pushers at Stats Can have spoken. We're just imagining the numbers on our grocery bills for meat and for vegetables, and for whatever else.
Poutinesauce wrote:
Find flyers from 5 years ago and you'll see that "inflation figures" are a total joke.
choclover wrote: No need to go back 5 years ago. Since COVID, it has been easier to see food prices inflating. Not a huge amount but enough to notice. And then add that to most items in your cart and it starts to add up. I understand that COVID might make things unsual but I also know that prices seldom go down but instead become the new normal. We did better with our vegetable garden this year and plan to do more next year. If real inflation takes off given all the weird stuff going on right now with the financial side of things, I don't want to feel like I am being "forced" to pay $12 a head for cauliflower like we did a few years back.
The inflation figures are correct.... from a certain point of view.

They use "equivalent" items and can make substitutions as they see fit. For an extreme example: 10 years ago, you could eat Steak, then beef prices inflated more than average so they replaced that with Chicken, then that went up more than average so they replaced it with Pork. So in this example, inflation on food has only been 2% a year, you've just gone from eating Steak to Pork chops over the same time frame.

The same is true for other stuff as well, if they can find a suitable replacement they can show a lower inflation number. If they compared actual apples to apples, you would be correct in that the numbers don't jive, but since they have the freedom for when apples become expensive you can just eat bananas, its not a true apples to apples comparison over time.
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SubjectivelyObjective wrote: The inflation figures are correct.... from a certain point of view.

They use "equivalent" items and can make substitutions as they see fit. For an extreme example: 10 years ago, you could eat Steak, then beef prices inflated more than average so they replaced that with Chicken, then that went up more than average so they replaced it with Pork. So in this example, inflation on food has only been 2% a year, you've just gone from eating Steak to Pork chops over the same time frame.

The same is true for other stuff as well, if they can find a suitable replacement they can show a lower inflation number. If they compared actual apples to apples, you would be correct in that the numbers don't jive, but since they have the freedom for when apples become expensive you can just eat bananas, its not a true apples to apples comparison over time.
I am sure the numbers can be justified and tweaked to suit the user's purpose however they wish to define inflation.

At the end of the day, I think what really matters is how much money we all have left after taking care of our basic needs. I would love to see a new statistic reported and that is "tax inflation" defined as the increase in monies we are paying the government each year. In BC this could include:
* ICBC (socialized car insurance)
* BC Hydro (socialized hydro)
* BC PST
* municipal property tax
* GST
* BC income tax
* federal income tax
* environmental fees and levies on durable goods, soft drinks, etc.
* carbon tax, gas tax, etc. for gasoline, natural gas, etc.
* possible road tax from newly elected provincial government??
* parking tax (I think this is an elevated PST on parking in the order of something like 10%)
* liquor tax
* any other taxes I have missed
* any new taxes that we don't know about yet that will be attributed to COVID

It seems that the net amount of take home pay keeps shrinking after we pay all of these taxes yet I would question whether the quality of life or the quality/quantity of goods and services we receive has really improved. In fact, many of these taxes are supposedly going to things that are far outside the true jurisdiction and control of these tax authorities (e.g. climate change) but how much better have our taxes improved the environment. The climate change issues have been going on for decades and yet they keep telling us that everything is geting worse despite the volumes in taxes collected from us. On the flip side, increased taxes that are supposed to go to causes within the control and jurisdiction of tax authorities such as homelessness and opioid addiction are not improving these problems either. I believe BC has suffered far more deaths due to opioids than due to COVID (and looks to be getting increasingly worse) and only during COVID did I learn that the opioid problem has been a public health emergency in BC for something like 5 years. Maybe it is time to re-evaluate where the increased taxes are going and why they seem to be making the problems worse not better.
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choclover wrote:
...
* any new taxes that we don't know about yet that will be attributed to COVID

It seems that the net amount of take home pay keeps shrinking after we pay all of these taxes yet I would question whether the quality of life or the quality/quantity of goods and services we receive has really improved. In fact, many of these taxes are supposedly going to things that are far outside the true jurisdiction and control of these tax authorities (e.g. climate change) but how much better have our taxes improved the environment. The climate change issues have been going on for decades and yet they keep telling us that everything is geting worse despite the volumes in taxes collected from us. On the flip side, increased taxes that are supposed to go to causes within the control and jurisdiction of tax authorities such as homelessness and opioid addiction are not improving these problems either. I believe BC has suffered far more deaths due to opioids than due to COVID (and looks to be getting increasingly worse) and only during COVID did I learn that the opioid problem has been a public health emergency in BC for something like 5 years. Maybe it is time to re-evaluate where the increased taxes are going and why they seem to be making the problems worse not better.
Our governments seems to be getting good at allocating money to help people who are impacted by a lot of these, however they never seem to address the root cause. Mostly because they view it as too hard, too expensive or its just not popular to do so. As a result, we have all these issues that go most untouched, and it creates more recurring expenses for the government and more programs which adds more inefficiency to the system.

COVID seems to highlight this, we had our cases down, things were looking somewhat under control, and the government had the chance to up their testing, contact tracing, increase travel restrictions to stop us from importing cases, but they didn't really do anything besides half assing most of those and wagging their finger at us to be good. Sure, you could say that getting rid of COVID to the extent other countries have done is hard, or expensive, but the effort required to get it more under control, and the expenses spent on contact tracing and testing, I can only speculate would be a lot cheaper than the tens to hundreds of billions of dollars we are giving out and going to have to give out as a result to the second wave and the shutdowns. Also, more people are mentally fatigued now with dealing with this, so it only gets harder to do everything moving forward.

I digress.....

Other than that, there are also just some increases in taxes that are completely unavoidable. For example, urban sprawl, which covers a lot of Canadian housing stock is unstainable by definition, so to service all our homes over these vast areas, as the once new infrastructure ages, the tax bill to keep these big capital assets in good shape is going to increase. Same with your water bill.

Insurance is general is interesting, while due to more extreme events occurring more frequently, insurance is going up for those reasons alone, but adding in interest rates isn't helping them.
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bubak wrote: Statscan breaks things down by category. All items CPI has averaged 1.8% since 2002 (37% over the 18 years). Food CPI has averaged 2.4% (54% over the 18 years). To make up for it, clothing and durable goods have gone down by an average of -0.5% since 2002 (-8% over the 18 years).
2.4% a year? They don't live on the same planet with their BS numbers.

Go look at the price of beef, poultry and pork and seriously tell me it only raises 2.4% a year. What is Stats Can using as "substitution", grilled cricket meat???
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Feb 7, 2018
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Poutinesauce wrote: 2.4% a year? They don't live on the same planet with their BS numbers.

Go look at the price of beef, poultry and pork and seriously tell me it only raises 2.4% a year. What is Stats Can using as "substitution", grilled cricket meat???
Agreed. BOC inflation figures are pure manipulation to keep companies and pensions solvent. Imagine if they posted the true yoy inflation and everyone had to get massive COL raises and pensioners would also get massive increases to their benefits. They do this to keep people humming along blissfully ignorant to the fact that their quality of life is decreasing every year due to true inflation.

It’s like shrinkflation at the grocery store - a 330g bag of chips is now 190g and the « family » size is 2x the price at 400g. They don’t factor this in, it’s just 1 bag of chips for $2 but you get so much less.

The same can be applied to housing, couples who could afford detached houses are now looking at townhouses or condos, or smaller homes further out on smaller lots. Inflation gets you one way or another, whether it’s in the upfront cost of living or hidden in our ever shrinking quality of life.
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May 31, 2017
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choclover wrote:
At the end of the day, I think what really matters is how much money we all have left after taking care of our basic needs. I would love to see a new statistic reported and that is "tax inflation" defined as the increase in monies we are paying the government each year. In BC this could include:
* ICBC (socialized car insurance)
* BC Hydro (socialized hydro)
* BC PST
* municipal property tax
* GST
* BC income tax
* federal income tax
* environmental fees and levies on durable goods, soft drinks, etc.
* carbon tax, gas tax, etc. for gasoline, natural gas, etc.
* possible road tax from newly elected provincial government??
* parking tax (I think this is an elevated PST on parking in the order of something like 10%)
* liquor tax
* any other taxes I have missed
* any new taxes that we don't know about yet that will be attributed to COVID

It seems that the net amount of take home pay keeps shrinking after we pay all of these taxes yet I would question whether the quality of life or the quality/quantity of goods and services we receive has really improved. In fact, many of these taxes are supposedly going to things that are far outside the true jurisdiction and control of these tax authorities (e.g. climate change) but how much better have our taxes improved the environment. The climate change issues have been going on for decades and yet they keep telling us that everything is geting worse despite the volumes in taxes collected from us. On the flip side, increased taxes that are supposed to go to causes within the control and jurisdiction of tax authorities such as homelessness and opioid addiction are not improving these problems either. I believe BC has suffered far more deaths due to opioids than due to COVID (and looks to be getting increasingly worse) and only during COVID did I learn that the opioid problem has been a public health emergency in BC for something like 5 years. Maybe it is time to re-evaluate where the increased taxes are going and why they seem to be making the problems worse not better.
I agree with this...I don't really have a problem with a broader CPI but there absolutely should be a "core CPI" that only covers basic costs - ie. groceries, clothing, shelter (rent, home prices, etc), communications (internet, cell, phone, cable etc), transportation (gas, insurance, parking, car prices, transit fares, etc), household utilities (heat/hydro/water), banking costs, AND taxes (including sales, income, carbon, fees/premiums/licensing etc). Lower income individuals are impacted by changes in these core categories since it is, likely, almost all of their spending.

A broader CPI that then also includes more non-essential goods/services should also be captured - sin products, hotels, tourism, airfare, restaurants, a "level up" in product categories, etc would also help define the impact on the middle to upper middle income classes.

The fact that we fail to capture government services and taxes in the CPI is an absolute joke - it's the single biggest cost to pretty much every person in the country - even low income individuals who pay minimal income taxes but get the same sales taxes, fees and premiums as everyone else.

I can tell you that I expect to lose my raise almost every year to increased government driven increases to utility costs, taxes and fees/premiums alone despite earning a well above average income and slightly above "CPI inflation" level raises. Throw in increases to food and everything else and there is no question my purchasing power is falling even with a few percent raise.

I don't think Stats Canada is "hiding" facts...it's not a conspiracy. They simply haven't adjusted the metric to reflect reality and it's been a problem for over a decade. What IS happening is that government is getting away with massive increases (WAY larger then inflation - exponentially large on many government driven costs) and they aren't getting called out on it because it's not in CPI, and otherwise not effectively covered by a weak Canadian media who do zero investigative work on the government unless it's sensationalist tripe.
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wiab89 wrote: Agreed. BOC inflation figures are pure manipulation to keep companies and pensions solvent. Imagine if they posted the true yoy inflation and everyone had to get massive COL raises and pensioners would also get massive increases to their benefits. They do this to keep people humming along blissfully ignorant to the fact that their quality of life is decreasing every year due to true inflation.

It’s like shrinkflation at the grocery store - a 330g bag of chips is now 190g and the « family » size is 2x the price at 400g. They don’t factor this in, it’s just 1 bag of chips for $2 but you get so much less.

The same can be applied to housing, couples who could afford detached houses are now looking at townhouses or condos, or smaller homes further out on smaller lots. Inflation gets you one way or another, whether it’s in the upfront cost of living or hidden in our ever shrinking quality of life.
This seems to be the key to our government's success. And combined with their communications staff/media personnel/(fill in the blank), it seems to be working with a good chunk of the population. So many people walk around doing the government's marketing for them, praising and condemning the same things that they are hearing on the morning news without being aware that they are not being given facts but opinions and slanted information. I used to believe everything I heard on the "news" until the flaws were pointed out to me. What a wake up call that was.

As life becomes more expensive and our purchasing power becomes less, we are really going to have to question if our leaders are making the right choices in terms of preserving the value of everyone's hard work.

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