this post was submitted on 21 Nov 2023
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The problem is that it's a year on year comparison, they should use a point in time and give a second number that would be a comparison to that point.
https://cupe.ca/cpi-calculator
From June 2019 to June this year inflation is 15.33%, that's something people can understand and feel, not 3.1% since last year. It's also using a reference point that is much more logical, months before a period of international turmoil, it shows us the impact the events of the last few years had and explains why we see inequality suddenly getting much much worse.
Those far smarter than me will and have commented on this before but my understanding is for purity sake there are specific ways they quantify inflation and the method you're referring to is far more disingenuous.
Personally speaking, year over year "makes sense" as this way it doesn't mask potentially disastrous trends (ie. disinflation).
Year on year only makes sense for economists, it doesn't make sense for regular people, hence all the comments every time they report the numbers saying "Yeah well my grocery is up X%, rent is up Y%, gas Z%, that's a whole lot more than what they're reporting!"
People live inflation long term, not on a yearly basis and those who are lucky enough to be unionized negotiate their wage increase over multiple years, not every year, both numbers are important, it's still dishonest to only report the year on year increase when people still have it fresh in mind that lettuce was 99 cents not too long ago and it's been over 4$ for years now, to them inflation isn't 3%, it's 400% on lettuce, the fact that it's stagnated for the last year means nothing on their budget when they suddenly had a hard time buying and they still have a hard time buying it.
Another example, housing is starting to stagnate if not depress in some markets, do you really think that people feel like they can trust economists when they're told "There's deflation in the housing market in your region." when they look at the price of a house that was selling for 300k five years ago when they were ready to buy and couldn't afford it and that's now on the market for 800k instead of 850k line it would have been 6 months ago? Sure, year on year there's deflation, it doesn't mean shit when you're trying to purchase a good that you want to own long term and all you see is that you still can't afford it because wages have been stagnating.
Heck, take actual wages into consideration and inflation is a hell of a lot worse than what's presented in the news! If prices stay the same but wages go down, it will get reported as inflation being 0% when in fact it's positive!
I don't disagree with a lot you're saying but there's a reason economists use x to x comparisons and that's because your best comparison for October 2023 is October 2022 not September 2023.
What you're describing is where, and it sucks saying this because it's cold AF, numbers don't care about feelings.
The layman like you and I want to put our lives into context on the numbers we see because we are in the weeds. That's fine and good and we are 100% valid in feeling the way we do but it doesn't change the reality that the best comparison for October 2023 is October 2022.
Now again I'm a dumbass. There are plenty better than me at explaining this but as someone currently doing heavy data analysis on a P1 we had at work you do not compare the day of the failure with the previous day because they're two different days of the week. Processes differ per day. If the issue happened on Thursday I want to compare it against previous Thursdays.
By this logic might as well take last month to compare because it's even closer!
If you compare the same month because you expect it to be the same annual conditions then you can use the same month two years prior or three years prior... Will you look at that, that's what I did! June to June, 15.33% over 4 years where you would have expected inflation to be 8.2% based on the BoC's objective to have inflation at 2%.
I'm not saying year on year isn't important to report, I'm saying they should report more than just that so people understand the difference and understand why 3% isn't what they're seeing.
Hell, did you know they also adjust the goods they use to compare so the 3% might be inside a basket of food but suddenly you're not buying chicken, you're buying tofu? Sure that's what people do in reaction to inflation, it still gives a very skewed view of what the real inflation is. With a fixed basket of goods inflation was higher than 15% in the USA in 2022 and you know what's funny? Anyone could have told you that the reported number made no sense when looking at the actual cost of living.
I'm still waiting on people "far smarter than you" to come and tell me I'm wrong to find it ridiculous that they only report year on year, funny they're not here.#
The people far smarter than us are the ones that do month over month and not the way you want. I fail to see how you are smarter that legions of economists around the world.
Again, I get what you're saying. For a layman like you and I it helps our emotions to do it a different way. What I keep stressing is that to those experts there is an intentional reason to not include emotion when analyzing numbers. If you do so you run the risk of making the wrong decisions.
You are free to continue screaming into the wind because the process is different than you would like. I'm simply telling you it isn't. There are more than likely very VERY good reasons. Better to spend your energy on more productive things.
What are you using the inflation number for? How does saying it is up 15% help you?
The point of measuring inflation at all is that we can use the information to make decisions. Knowing that inflation is slowing or rising is useful. I know prices have gone up. What I want to know is how much they are likely to go up in the future. Am I stockpiling sugar or putting a little money into stocks? How long should I lock my mortgage in for? Will I even be able to afford it? Do I need a second source of income? Or do I think I might be able to save a little this year for a big purchase? How much money am I going to need to retire? How old will I be?
The value of these numbers is forward looking. If I want to know that prices have gone up, I can just go to the store. I do not need the government for that.
If you're looking forward then what do you need the year on year number for? What you want is future predictions, if you want to know how the price has varied in the last year you can "just go to the store" right?