I’m a big fan of CNBC’s Rick Santelli, and I particularly enjoy watching when he gets into it with senior economics reporter Steve Liesman. In a recent CNBC clip that I missed on live television but picked up online shortly thereafter, he finally said what many of us average American consumers are thinking. “Listen, I don’t believe the government’s calculations,” Santelli said. In a retort to Liesman’s request for better inflation numbers, Santelli replied, “I don’t have better numbers, I have common sense.”
I have to agree with Rick on this one. I watch costs quite closely, I gauge our family’s expenditures through expense tracking, and I can see inflation all around us, even if the government can’t. Whether it’s through blatantly higher prices or deceptively smaller packaging, inflation seems to be creeping into our lives whether the government wants to admit it or not.
Health and medical care
Tell me there aren’t millions of people out there who are going to see their healthcare cost rise as a result of Obamacare. Sure, now they have insurance, and maybe that’s a positive, but their costs in this area as a result — whether they’re paying for new insurance or accepting the government’s penalty for remaining insurance-free — may have just skyrocketed.
Last year, our premium costs went up nearly 25 percent. To combat the effects of this increase, which equated to almost $2,500 a year in additional premium costs, we reduced expenses in certain discretionary spending areas such as food, entertainment, clothing costs, and even holiday spending.
Here’s a question for you? How are home values increasing and mortgage rates going up in a supposed housing recovery without there being inflation in housing? And with housing-related expenses being some of the greatest costs most of us encounter in our budget, you’d think that this would be pushing inflation higher.
According to Zillow.com, housing prices in our area of Chicagoland are up as of late, our particular suburban area being up over 10 percent this year off the lows after the housing market crash. Meanwhile, Zillow reports that nationally, their home value index is up 5.8 percent year-over-year. While I understand that like fuel, housing prices can fluctuate — and as a home owner, I’m glad they’re going up right now — but if that isn’t inflation, I guess I don’t know what is.
Transportation costs and food
After home-related expenses, transportation and food costs can be some of our most pricey regular-occurring expenses. And while I’ve seen prices at the grocery store going up, that’s not the only factor at work here. Sometimes it’s a slight of hand that has an affect on inflation through product sizes. According to a NY Times article published in 2011, “Most companies reduce products quietly, hoping consumers are not reading labels too closely.”
It goes on to say, “But the downsizing keeps occurring. A can of Chicken of the Sea albacore tuna is now packed at 5 ounces, instead of the 6-ounce version still on some shelves, and in some cases, the 5-ounce can costs more than the larger one. Bags of Doritos, Tostitos and Fritos now hold 20 percent fewer chips than in 2009, though a spokesman said those extra chips were just a “limited time” offer.”
Changes like these are often made under the guise of being “eco-friendlier packaging” or served in “healthier portion sizes”. However, even then, I’ve seen prices go up and packaging sizes go down on things like baby formula, coffee, chips, meat and dairy products, and a variety of other food and grocery products. And with gas moving from an average of $1 per gallon in our area of the Midwest back in 2000 to the $3.50 to $4 per gallon range, it’s obvious that this expense area is no stranger to inflation, rising at a rate of about 275 percent over that 13 year period.
So I’d have to agree with Rick Santelli, I just don’t buy into the government’s inflation numbers, preferring to use my own good judgment to decide how inflation is affecting my family.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.