How can inflation be only a few percentage points and yet many goods and services are up over 50% since 2019?
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Because a new TV costs half as much as a similar one did five years ago, your chicken tenders can double in price.
It all averages out to the number you see from the government.
CPIs used to calculate the single inflation amount can be very wonky. You need to go into detail into each sector/product to see the real situation
Every single country in the world has a metric called a “basket of goods.’ These are considered to be the things that an average person would buy. The Consumer Price Index does track every single price but when it tells you an inflation number it’s based on pulling based on the criteria of the “average person.” For example the average person doesn’t live off of just flour and milk, so food inflation has to be reflective of the price of meat and the price of lettuce as well.
Because these figures end up being averaged the price of one thing going up heavily doesn’t impact the overall inflation. That individual item has inflated by 50%.
In addition to what others have pointed out regarding inflation reflecting a basket of prices etc., there’s also the compounding effect. 3.5% inflation over 5 years works out to 19%. Throw in 1 year of 10% inflation and that’s 26%. 1 year of 3.5%, another of 10% and 3 of 5% is 31% etc. etc. These small fluctuations add up, and you never get that back. Suddenly 50% for some goods isn’t too far off.
The real reason is that those inflation reports are often made by either government agencies or private organizations supported by government agencies. And as such, they make sure to calculate th8ngs in the way that, despite not being false, give a better impression than reality.
Stuff like only comparing to last year even if the inflation is intense since 3 years.
Lowering the average by including the prices of stuff that consumers don’t really buy but big companies do (thus diluting for example the inflation of groceries)
And all kind of such tactics.
First of all, 2019 was 4 years ago. It was not last year. Prices, on average, are up 19% since June of 2019.
This is because, while some items are up over 50%, others have stayed mostly flat. So on average, your overall spending is up 19%. Now some people are luckier or unluckier, so some people might spend more than average on the things that are up over 50%, while others might spend more than average on the things that are mostly flat.
I call these kinds of numbers government jerk-off statistics so that they can try to make things look better than they are. Until we see deflation, any inflation number is just adding to an already record increase which is still a record increase, regardless of how low the positive number gets.
See unemployment vs. workforce participation as another example.
Imo the simplest answer is: global governments have incentive to lie or massage the numbers. The “basket of goods” (the items for which inflation is calculated on) intentionally leaves out certain items to make reported inflation seem lower than reality. Eg many places do not include rent in their inflation calculation, which are constantly sky-rocketing, and yet rent is a critical need for most people and one of our biggest expenses.
That number refers to inflation for the entire economy. Which is not the same as saying “all goods and services” have had inflation by a few percentage points. It is an average. Some sectors have different amounts of inflation than others.
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