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Comment by paulpauper | Hacker News Reader

As others have mentioned, it's confusing if you don't know anything about how CPI works or how the reporting works

To bystanders it looks like inflation is up 8-9% every month, which is obviously false

If the growth of inflation resembles a step function, then the YOY change will be reported as being very high each month even if inflation is not changing on a monthly basis.

https://greyenlightenment.com/2022/07/03/sensationalism-and-...

Headlines that read "inflation rose 9% in $month$" are liable to cause a lot of confusion. A .5-.8 % monthly change looks way less bad than a 8-9% YOY change. The psychological implications of this are potentially huge because probably a lot of people think that inflation is rising 8%/month.

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> The psychological implications of this are potentially huge because probably a lot of people think that inflation is rising 8%/month.

It does not help that all the big ticket items people are interested in purchasing (land, healthcare, education) have all been increasing at far greater rates than official statistics for 10+ years now.

Who cares if bread is inflating at 0.5% per year if the house you are saving for goes from $300k to $600k and the education you got for $20k/year is now $60k/year for your kids.

My pet theory is that the rising cost of housing is responsible for the vast majority of economic disruption over the last 20 years (for everyone, even home owners.)

Service/factory/teaching/childcare/eldercare jobs don't pay enough to buy a house and renting has become highly predatory, so anyone who can get out of those professions and into finance/tech/marketing (often useless but high paying jobs) will do it. The people who stay in those professions get burnt out and deeply frustrated.

It feels like most of the jobs that provide inherent, tangible benefits to society don't pay enough to provide a stable life.

That is quite an apt description of the plight of current millenials. That and declining birthrates, perhaps they are inextricably linked?

This talk by Elizabeth Warren, before she was a US Senator, talks a lot about this problem of essentials like housing, education, and healthcare going up much faster than, say, a new TV price: https://youtu.be/akVL7QY0S8A

In case anyone is curious, the following are the seasonally-adjusted monthly changes for the past twelve months, from the oldest to the newest: 0.5%, 0.3%, 0.4%, 0.9%, 0.7%, 0.6%, 0.6%, 0.8%, 1.2%, 0.3%, 1.0%, 1.3%.

https://www.bls.gov/news.release/archives/cpi_02102022.htm https://www.bls.gov/news.release/archives/cpi_07132022.htm

To highlight a couple of things in particular: The monthly rates do not resemble a step function. The increase for this latest reported month is the highest for the past year, at 16--17% annualized.

The whole headline is wrong, not just because they're talking about a yearly increase not a monthly one.

_Prices_ rose 8-9% YoY, not inflation. Inflation is by definition the increase in prices, so inflation was 8-9%.

Prices also went down during covid so if something had a price of $1.05 in 2020, $1.00 in 2021, then $1.08 in 2022, YOY shows the price went up 8% but it’s only gone back to normal. In the 70s it was several years in a row of 10% inflation which I doubt we’ll see.

Edit: it would also be interesting to see if the basket of goods the CPI uses shifts during that time. If people were using less transportation, perhaps transportation costs should have been weighted less for 2020 even though we know the price increased due to supply constraints.

What prices went down during covid? Housing? Vehicles? Food? I recall only gas was cheaper.

"If the growth of inflation resembles a step function"

Did you mean 'growth of prices'?

(If you did, your comment makes perfect sense to me. If you didn't, then I have misunderstood your point.)

Unless you live in Argentina, where inflation increases around 5/6% per month

People generally know what it means. The impact is from the fact that they know real inflation is worse than what is reported, and if the reported inflation is more than expected that’s a pretty bad sign.

Also, any rise in prices, while small, is likely permanent at this point.

Given that the headline of the article is clearly wrong, as another commenter pointed out, I don't think people generally know what it all means. They have feelings associated to the topic, certainly, and those shouldn't just be dismissed. But humans are in general famously bad at dealing intuitively with numbers. Why should inflation be the outlier to this rule?

The headline can be fixed by adding just one word.

Yes. It should say: "inflation rose to 9.1% in June".

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