No pictures of fluffy sheep and green hillsides today. I was reading a blog post by David Stockman on a topic that I have long been mulling over. And that is the good, the bad and the ugly of reported rates of inflation.
The good would be the amount of inflation that is considered desirable, widely assumed to be in the vicinity of 2%, the bad would be the numbers as reported by one of several official government organs, and bad because those numbers are open to all manner of manipulation and thus second-guessing, and the ugly, the actual rate of inflation as experienced by we the people.
The power grid
It so happens that I have my very own database of this sort of information - because I keep such things around on the off chance I might one day need it :-)
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I have had the same electric company for 6 years now, and I dug back through the pile to the first bill in February of 2008: $17.70 per kwh. Then I compared that to the bill from Febrary of 2014: $25.615 |
The rest is just plugging in to an online calculator. In a CAGR calculator that's 6.35% (the UGLY) well higher than Stockman's calculated 4.5% for the decade from 2004-5.
As it turns out, it has been a steady march,
Feb 2008: 17.70
Jan 2009: 19.558
Jan 2010: 19.558
Jan 2011: 21.306
Jan 2013: 23.299
Jan 2014: 25.615
which shows how the frog boils in the water, because I hadn't pulled out and studied the numbers behind the amount owing, and who really has time to?
To take it a step further, the BLS has a nice inflation (official inflation, see BAD above).
http://www.bls.gov/data/inflation_calculator.htm
According to this cumulative inflation calculator, from Feb 2008 to Jan 2014 the official cumulative rate would be 10.50%. Indeed the BAD over at the BLS give you their official CPI inflation calculator which says $17.70 in 2008 would be $19.43 in 2014.
That's 19.43, at the official rate.
10.5% at the official cumulative rate over these 6 years.
Not 44.7%
Just one person's experience from out there in the real world that Stockman describes.
