gavinfielder
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But aren't we seeing slight inflation now?
Shouldn't hoarding result in deflation by your model?
Had a quick thought. It's fairly obvious that people are more conscious about how and where they spend their money, and that this has increased the effectiveness of "on sale" marketing. As for me, nearly everything I buy now I only buy when it's on sale.
I can't imagine that CPI would cover this shift in shopping trends, and so could it be considered hidden deflation?
On the flip side, food manufacturers have been putting less.product in the same packaging for the same price for some time, which is supposedly a factor in why we don't SEE inflation in food prices, even though its actually there.
But it does. When the economic assistants collect prices, they collect the price at the time, so a 50% off sale is recorded as a 50% drop in price. And when it comes off sale, that's recorded as a 100% increase.Had a quick thought. It's fairly obvious that people are more conscious about how and where they spend their money, and that this has increased the effectiveness of "on sale" marketing. As for me, nearly everything I buy now I only buy when it's on sale.
Normally, businesses wouldn't be so keen to cut their prices, but if it's a "sale", they actually get more sales, and functionally, it's the same thing as cutting their prices.
I can't imagine that CPI would cover this shift in pricing/shopping trends, and so could it be considered hidden deflation?
But it does. When the economic assistants collect prices, they collect the price at the time, so a 50% off sale is recorded as a 50% drop in price. And when it comes off sale, that's recorded as a 100% increase.
Right, so it won't be a huge effect...averages will mute the effect of individual sales.But they do not sample the prices at just one location in a metropolitan area and they only sample in bigger urban areas
For regularly occurring sales, like memorial day sales, January sales, etc yep.and then the seasonal adjustment algorithms likely smooth out the effect of a sale price.
Yes, it is. A $1 can of tuna going from 5 oz to 4.5 oz would be recorded as a 11% price increase. All quality adjust mementos, up or down, are taken into account.Someone also brought up packaging and portions--that is a great point. Smaller portions in chip bags and the like are really just examples of inflation--yet that isn't measured.
I am not sure that is accurate. Do you have a source for that claim? I am aware of quality adjustments removing increases in quality. I have never seen the CPI adjust the price of chips based on the smaller portion sizes in the bag.Yes, it is. A $1 can of tuna going from 5 oz to 4.5 oz would be recorded as a 11% price increase. All quality adjust mementos, up or down, are taken into account.
I'll look later for where it specifically mentions it in the bls website, but I used to be a commodities analyst on the CPI, so I personally made quantity changes like that while putting the index together.I am not sure that is accurate. Do you have a source for that claim? I am aware of quality adjustments removing increases in quality. I have never seen the CPI adjust the price of chips based on the smaller portion sizes in the bag.
Here is the explanation I found:
"Quality adjustments remove from the CPI the cost of any improvements in quality, even if they become standard."
CPI Quality Adjustments [ClearOnMoney]
Doesn't mention the opposite at all.
Regardless, the quality adjustments often come under criticism for under-stating the true level of inflation and how it impacts the cost of living.I'll look later for where it specifically mentions it in the bls website, but I used to be a commodities analyst on the CPI, so I personally made quantity changes like that while putting the index together.
Regardless, the quality adjustments often come under criticism for under-stating the true level of inflation and how it impacts the cost of living.
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