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INFLATION
YES ... PRICES ARE RISING NPR YOUR MONEY: You can run, but you can't hide: Inflation is busting budgets, and killing joy too 
Inflation is coming from inside the house. Rising prices are forcing tough decisions ... Andriy Onufriyenko/Getty Images Original article: https://www.npr.org/2022/10/18/1129431951/inflation-you-can-run-but-you-cant-hide Peter Burgess COMMENTARY Inflation is an important issue, but the quality of reporting on this issue is incredibly weak. Most of the people reporting on inflation are doing little more than listing the changes in prices that are being experienced, with almost nothing about the underlying economics and business decisions. I have been involved with business and economic analysis all my adult life. I try to be very rigorous about the different behaviors of cost, price, profit and value, not to mention the difference between investment and gambling around stock markets. Everything in the following article is about price and what price is doing to the consumer. There is nothing about why the price is going up ... yet this is really the critical question if policy makers are going to address the problem of inflation effectively. One of my constant refrains is that the inflation that is being experienced now (in 2022) is very different from the inflation that was experienced in the 1970s. Generally speaking in the 1970s, the inflation was 'cost-push' inflation while now the inflation is much more 'demand-pull'. In both cases, the energy companies have had and are having an important role in driving the price increases for a wide variety of products needed by consumers. Energy companies are in a very strong position to operate in ways that optimize their profit performance ... and they are doing this as aggressively today as they ever have. They are expert at messaging and 'spinning' the story to their benefit. The good news is that the EU is quite likely to impose some sort of 'excess profits tax' on price gouging by energy companies. This should be done in the US as well, but that is never on the agenda in the USA but absolutely needs to be. Business decisions by many critical companies during the pandemic set the stage for serious imbalances between supply and demand. Many companies reduced production and inventories in order to maintain as much profitability as possible. Meanwhile, important decisions by both governments and central banks helped many economically powerful countries to limit social hardship and avoid economic meltdown as a result of pandemic related lockdowns. As a result, consumer demand did not reduce as much as production had been reduced. In a capitalist market driven world, this is a profit opportunity and many companies ... not all ... managed themselves so as to earn record profits. In spite the economic disruption caused by the Covid pandemic, many companes made record profits in recent quarters and the stock market reached record highs. The stock market has been revalued substantially in the course of 2022, because there is a growing sentiment that a rather small group within the investment community has been doing very very well while most people in society are facing more and more economic difficulty. The following article confirms that prices are increasing and therefore there is inflation. The article does little to explain what is really going on to cause inflation and to some extent merely diverts attention to make it a Washington problem to be addressed by the incumbent President and administration when it really is corporate greed and lack of social responsibility that is the true culprit. Peter Burgess | ||
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YOUR MONEY: You can run, but you can't hide: Inflation is busting budgets, and killing joy too
Written by STACEY VANEK SMITH October 18, 2022 7:01 AM ET Inflation is starting to seem like the horror movie monster that won't die. The newest data from the Bureau of Labor Statistics shows prices in September hit another 40 year high. What was striking about the data was that a lot of the worst inflation is hitting us at home: rent was up 7.2%, electricity prices are up 15.5%, groceries are up 13%. Seeing as how it's spooky season, and the economy seems to be full of monsters, I thought it appropriate to invoke the classic horror film When a Stranger Calls (1979) –a terrifying tale of a woman babysitting a couple of kids, who keeps getting calls from a creepy stranger. She finally has the call traced (this was waaaay back in the days of landlines) and the operator calls back with the terrifying news: The calls are coming from inside the house! Inflation, too, is coming from inside the house: lurking inside a carton of eggs (30.5% more expensive than last year), crouching in your closet (prices for women's suits are up 10%, men's suits are up 9.5%), or even hiding inside the walls (utility gas up 33.1%). But unlike the killer in When a Stranger Calls, inflation doesn't tend to get us with one deadly strike. Instead, it's been hanging around for months, destroying our peace of mind and stealing some joy out of life. Because there's no avoiding paying for shelter, food and health insurance (up 28.2%,the biggest jump on record) consumers have to find other places to cut back: everything from vacations to eating out to even giving up favorite activities or foods. 'Steak, that's killing me,' said Steve Brown, 46, an optician in South Carolina, who works at an independent eyeglass store, fitting people with frames. 'The same ribeye steaks that I was paying $17 for two of them are now $32.' Gas prices that have been the biggest blow for Brown. They're up 18% over last year, and he has a 50-mile commute to-and-from work every day. That he can't avoid, but he's had to cut out the driving he loves: his weekend motorcycle rides. 'The back roads by the marsh,' he said. 'There's water on both sides of the road; you can look over and see downtown Savannah; you can see the ports.' Brown said those weekend motorcycle rides are his happy place. 'It's total freedom,' he said. 'I just, I put music on and all my problems just go away.' Brown's song of choice? Raining Blood, by Slayer. But earlier this year, Brown noticed something else was getting a bit bloody: his gas bill. Filling up the tank of his motorcycle went from costing him around $25 to around $50. So now? 'I just stay home and watch Netflix.' Brown said the thing that keeps him up at night is retirement. Although it's still decades away, he sees people come in to the optician's shop every day who thought they had done enough saving for their future, and are now stuck making really difficult decisions. 'I see some of these elderly patients that come in and they're like, 'Do I pay the electric this month, or do I get new glasses?'' When prices hit home like this, analyst Omair Sharif of Inflation Insights, starts getting lots of calls: Family, friends, neighbors, all want to talk about what he thinks will happen with inflation. 'Everybody wants to talk about it and it's like the last thing that I want do,' laughed Sharif. 'But it's on everybody's radar at this point. The big part of it, of course, is shelter cost and rent.' But lately Sharif has been delivering some good news. He thinks inflation will start dropping as soon as next month. He says the costs of rent, health insurance and clothing are showing signs of declining and he thinks this moment might be the darkness before the dawn. 'I feel better about the outlook than I have in quite a while. I'm hopeful that we should see a lot of relief coming,' Sharif said. Many forecasts are not so optimistic. Inflation expectations are on the rise overall and many economists think rising prices will last at least into next year. Steak and Slayer lover Steve Brown is hoping the lifestyle cutbacks he's making now will help him protect his future. He just got engaged and he has a whole plan: 'I just wanna have a nice piece of property on the outskirts of town,' he said. 'A garden where I can plant my own food, and maybe some animals. And not a huge house, but a nice-sized house.' Brown said with the cutbacks he's been making - that dream, at least at the moment, is still within reach. But if inflation continues at this pace, the scariest chapter could be still to come.
| The text being discussed is available at | https://www.npr.org/2022/10/18/1129431951/inflation-you-can-run-but-you-cant-hide and |