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Posted: 1/31/2006 4:38:14 AM EDT


With the price of food, fuel and utilities how can the FED say that inflation is low? The cost of goods has gone up but wages are pretty stagnate, even if they are increasing they are no increasing at a rate comparable to the rise in the cost of goods.
Link Posted: 1/31/2006 8:22:38 AM EDT
No replies? Am I way off base here?
Link Posted: 1/31/2006 8:29:18 AM EDT
It's annoying,that much is true. It's still only around 3.8% according to the CPI (which includes fuel and housing,IIRC). My wages increased 4% this year,which makes me roughly break even.
Anything under that and you got a pay cut.
They can still say it's low because it's lower than that of most of the other developed nations.

Link Posted: 1/31/2006 8:31:18 AM EDT

Originally Posted By NoHarmNoFAL-01:

With the price of food, fuel and utilities how can the FED say that inflation is low? The cost of goods has gone up but wages are pretty stagnate, even if they are increasing they are no increasing at a rate comparable to the rise in the cost of goods.



Because there is no such thing as 0% inflation.

Fuel prices today have other factors causing price increases than just inflation. Some utilities are also affected by the same factors that cause rise in fuel prices.

I have not seen an increase in food prices.
Link Posted: 1/31/2006 8:34:49 AM EDT

Originally Posted By NoHarmNoFAL-01:

With the price of food, fuel and utilities how can the FED say that inflation is low? The cost of goods has gone up but wages are pretty stagnate, even if they are increasing they are no increasing at a rate comparable to the rise in the cost of goods.



Inflation is just the rate at which cost of goods go up.

If wages aren't keeping up, that is a separate matter - but not part of the inflation equation. So in essence, there are many people whose "real" (i.e inflation-adjusted) wages are actually dropping. I know that my annual raises are not necessarily keeping up with inflation.

There are some studies that claim that working class and lower middle class real wages have been stagnant and dropping for the last decade (whereas upper class wages - like excutives, etc - are the only ones that are growing significantly in real terms).
Link Posted: 1/31/2006 8:46:20 AM EDT
So it is not so much inflation but it IS a cost of living issue. If inflation is 3.8% and you get a 3% raise then your cost of living raise is a 0.8% pay redux. I fully understand that the cost of energy is based on commodity trading and a global market but it does impact Joe Sixpack pretty hard. I figured up my break even point for driving to work is some where around $6.00/gal. I can only imagine what would happen if my heating costs went from $180+/- per month to $600.
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