Friday, March 28, 2014

Inflation without inflation

Official Eurozone inflation numbers are out: 0.7 percent compared to a year earlier.

What does it mean?

You have heard the saying "there are lies, damn lies, and statistics", but don't be fooled by the smartass or the cynic. Statistics do not lie, only the people who create them or those who interpret them.

The experts who make the typical buckets, or the typical shopping carts used to measure consumer side inflation are extremely powerful, yet unknown to the public.

What they do largely explains why you can worry about rising prices while the media joyfully report low inflation. We decided to keep a rough tally of the prices of the groceries we use on a day to day basis. Almost all items have become more expensive, with milk topping the charts at about 20%.

Meat at the supermarket has become slightly cheaper for some types of meat but 20 cents out of 5 Euros translates to 20 cents less a week for meat at a time when our weekly milk cost is up by 1 Euro.

By the way, scrap metal is cheaper than last year, maybe an iron rich diet would be the way to go?

To make a long story short, it does not matter to most people if power drills become cheaper unless you are the middle aged white male who eats small bits of ariplanes just for the fun of it.

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