Hidden Inflation Can No Longer Be Hidden

We keep hearing how inflation has been flat for the past few years. At least the government has been telling us so. But when food prices and energy costs keep climbing at a prodigious rate, there's no way anyone can retain a straight face when telling us inflation is low.

One telling point: a new price record was set for ground beef - $4 a pound.

As Glenn Reynolds writes: “Inflation is basically nonexistent, though, so long as you don’t eat, drive, or heat and cool your home.”

If the cost of food and energy were factored in to the Consumer Price Index, I bet you'd see inflation has been somewhere between 7% and 10% per year. As is mentioned in the link about meat prices, the cost of a pound of ground beef was around $2.13 in August 2009. So in 5 years the cost has climbed by 88%.

While it appears that other food prices haven't really changed all that much, they really have because a lot of food producers have reduced the size of their packages but are charging the same amount as before. An example is ice cream.

You use to be able to buy a half-gallon of ice cream. Now it's 3/8ths of a gallon for the same price. Something as simple as pudding cups have also been downsized, in this case where once you got a package of 6 cups you now can only find packages containing four pudding cups, but your paying the same price as you did for 6. There are hundreds of examples I could cite, but you get the picture.

I had mentioned in an earlier post that even the cost of firewood has gone up, with prices rising about 18% as compared to last year. At the moment heating oil and propane aren't too bad, but they're still a lot higher than they were in 2008. (once winter gets here I expect to see the prices approach $4 per gallon.) One of the reasons we heat with wood here at The Manse is because for the cost of one month's supply of propane I can heat my home for 6 months with wood. While propane is convenient, all I hear every time the furnace starts is money going up the flue. A lot of money. Frankly I have better things to spend our hard earned money on rather than propane. But at least I have an alternative. A lot of other folks don't and that can put them into one heck of a financial bind.

Welcome to Obama's Economy.