11779 replies to this topic

[Barrrister]

Mike: What???? Politicians might be lying to us? Tell me that it is not true.

[Mike K.]

It’s not even the politicians, but the economists and policy makers in Ottawa. How is it that inflation is 2.5% (or whatever) but groceries are up 7%, taxes are up 6%, gas is up 5%, and so on.

[Ismo07]

It’s not even the politicians, but the economists and policy makers in Ottawa. How is it that inflation is 2.5% (or whatever) but groceries are up 7%, taxes are up 6%, gas is up 5%, and so on.

 

It's a huge average I think and there are many things in it that you are not listing.  This is for the UK so maybe it will help How is Inflation Calculated? - Economics Help.

[spanky123]

It’s not even the politicians, but the economists and policy makers in Ottawa. How is it that inflation is 2.5% (or whatever) but groceries are up 7%, taxes are up 6%, gas is up 5%, and so on.

 

You mean the economists and policy makers that the Feds and the CBC quote? Not like they are unbiased. Works the same way with most Government consultants. You can either give the Government the information they want or you can find another client. 

[Mike K.]

It's a huge average I think and there are many things in it that you are not listing. This is for the UK so maybe it will help How is Inflation Calculated? - Economics Help.

I think if you read into it more, you’ll find there’s some very creative number crunching going on.

Pensions, benefits, wages and social services are tethered to the rate of inflation. It is not a coincidence that government is telling us inflation is 2.5% with a nebulous average they reference, while you and I are spending 5% more on everything.

Look at the CMHC. They, with their infinite resources and access to data, are greatly out of step so often that you wonder how they can be so off-base so often and not publicly address the discrepancies.

[Rex Waverly]

I think they use CPI (consumer price index) to determine inflation.... it's based on the cost of a wide range of goods / services, so although some things are more expensive, the cost of other indicators might be largely unchanged (or maybe even gotten cheaper).   

 

From https://www150.statc...1/t001a-eng.htm

 

[Rex Waverly]

Also keep in mind, the 2.2% number is based on March 2020 to March 2021, so essentially the entire Covid period.   Inflation was negative in April / May 2020 and then stayed at 0-1% until February. Likely the next 6 months or so will have a really high inflation number, because it will be comparing say June 2020 to June 2021.   

 

(Also, i'm definitely not an expert on this, just basing it off a quick google search so i could be way wrong on this....)

[Mike K.]

I think that’s the issue, that we look at the consumer price index as the main ingredient in the cost of living, and not the others. So you have to dig deeper to get a true sense of inflation on your wallet.

For example, consider how expensive fundamental items have become, like wood, metals, semiconductors, etc. Big assets like real-estate are up 25%. Cars are up. Energy ran 30% so far this year.

I think the truest form of inflation just might be municipal taxation, and it’s pushing 6% vs the CPI of 2.2%. Either municipalities are fitting squares into spherical holes or the CPI is telling us only half the story.

[spanky123]

^ The problem with looking at municipal taxation is that it is hard to get a sense of true opex increases year over year. There is so much shuffling of money between accounts that they can really make the numbers look pretty much like anything they want.

[Mike K.]

Colwood just announced 5%.

[lanforod]

Municipal inflation is way more a factor in who is running the gongshow than actual cost increases. Pet projects increase spending faster than anything else.

[Tom Braybrook]

speaking of inflation

 

tax bill arrived today - taxes up 2.5%...assessment was up 1.4%

 

my tax increase was inflated for sure

 

 

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[Mike K.]

Municipal inflation is way more a factor in who is running the gongshow than actual cost increases. Pet projects increase spending faster than anything else.

Yes, quite true. It adds a human element the CPI doesn’t.

[Awaiting Juno]

The CPI is based on a weighted basket of goods and services - it's not a perfect measure, but it is consistent, and I do not believe "economists are lying" when it comes to CPI, rather, people are very sensitive to cost increases but far less sensitive to the areas where costs are declining.  As an example: clothing now seems really cheap.

 

The new policy on deconstruction, is what has to be expected from this council - where the core idea has some merit (attempt to divert as much as possible away from landfill) but the implementation flawed at best and likely to result in significant consequences to the new construction market in Victoria. Deconstruction has very limited supply, is very labour intensive and is more costly than the alternative.  Most people would be absolutely happy to have habitat for humanity to strip their homes of construction materials before demolition - however, this goes a step further and will likely mean fewer new homes getting built in the city (as there are generally no bare land lots), at a time when more new housing, particularly multi-family housing is needed. 

 

The city should be looking towards how it can reduce costs of new supply - yet at every turn there's more expense being added to already stretched budgets. Construction costs are getting insane (really).

[spanky123]

^ I am waiting for the other shoe to drop which will be that deconstruction is not required if you are building 'affordable' or rental housing.

[Victoria Watcher]

^ I am waiting for the other shoe to drop which will be that deconstruction is not required if you are building 'affordable' or rental housing.

 

they have already sort of done that now by starting with SFD.

[spanky123]

The CPI is based on a weighted basket of goods and services - it's not a perfect measure, but it is consistent, and I do not believe "economists are lying" when it comes to CPI, rather, people are very sensitive to cost increases but far less sensitive to the areas where costs are declining.  As an example: clothing now seems really cheap.

 

Where they have been making changes is in the weight of the items in the basket. Things that have been going up rapidly like housing and food have been given lower weights while things that tend to be flat or declining due to technology advances have been given higher weights.

 

https://www150.statc...2019001-eng.htm

[sebberry]

They better be using the same weight basket each time.

[Rex Waverly]

I think the weighting changes because it's based on consumer spending habits; it's basically what percentage of a household budget is spent on something. So the weighting and actual dollar values are separate.

 

Quick and over-simplistic example: say televisions drop 10% in price, then it's portion of the CPI should go down 10%.   But if households start buying 2 TVs instead of 1, the weighting of that category should go up, since it's a higher percentage of the overall household budget.

 

(That's assuming the rest of the budget is constant... since obviously costs of other things are also rising, the technology budget would have to increase at a faster rate than the average budget item. But that's why it's a overly simplistic example, i guess)

[Mike K.]

If you talk to economists about the CPI they will collectively speak to the CPI being a consumer-level marketing-speak simplistic index that does not address the fundamental under-currents that really drive inflation.

The largest expenses are shelter, transportation, and food. Those account for nearly 100% of family expenses in our society. The CPI tracking 50 different segments gives us false readings but that’s by design, otherwise government would be in over its head to maintain pensions and inflation-tethered responsibilities if it operated with a focus on the key metrics.

And all we really need to know about inflation is how many Canadians are living with average (ie good or decent) incomes but are only a few missed paycheques away from insolvency. The number is staggering.