Yes, Virginia, there is inflation
 

I felt inflation shock today.

I've been shopping for new implements for the Kubota tractor. I recently sold my old tiller and have plans to buy a larger model. About 5 weeks ago, the price on the 72" tiller was $1450. Today, the price is $1598. The salesman blamed the price increase on higher fuel prices.

I'm also hunting for a good buy on a tractor-mounted post hole digger. The best price for the model I want is $715. I decided to do some googling to find other dealers. I spied a place in Iowa. Their price list(apparently from fall 05) showed a price of $514 for the same model. I phoned the dealer, and he said the price of everything has gone sky-high.

I know steel prices are up big since 2003, but I didn't think we'd see consumer-level prices up 10% within a few months.

Anyone else feel the pain, lately?
jurgen

I'm in the woodworking business, mostly hardwoods but also some pine, cedar and fir. Everything is jumping up in price. Most notable is the price on white oak.

One of our regular customers had us quote a very large white oak job (tractor-trailor quantities here) just two months ago, and now those price quotes are worthless. Our cost has jumped 20% in that time, and some thicknesses, such as 6/4 and 8/4, are getting hard to find.

Even poplar, pretty much a commodity lumber for our trade, has jumped $200 per thousand B.F.

Ed

The company I work or is wokring on a price increase. Cost of materials is over double over what it was a few years ago.

I'm surprised inflation of materials hasn't worked into core CPI numbers. The last number was 0.3% or 3.6%/yr inflation. That number understates the severity, and I feel it will only get worse. Then again, this is the first time I've been shocked by a price increase. Inflation is usually a silent force.

The CPI is useless.

CPI has various adjustments that cause it to understate actual inflation. Substitution, hedonic, core, etc.

Whether these are done to make the CPI more valid, or to minimize the part of the budget deficit caused by cost-of-living adjustments, is unclear - probably depends on how cynical you are.

Here is a great article explaining it.

http://www.financialsense.com/stormwatch/2005/0624.html

I really wish I had an estimate of what true CPI would be without these adjustments. My gut guess is something like 7% currently.

When the cost housing and energy doubles in 3-4 years, and rents rise 30-40% in desirable areas, that is the worst inflation I have ever seen in the U.S. It is unprecedented.

It will affect every area of life, I'm just surprised that the doubling of diesel prices has not made prices of everything jump even faster. I want to stay hopeful, but I think that we are in for a long period of diminished quality of life for most people.

It's the ugly underbelly of the beast called "growth", unless you have multiple planets to inhabit and pull resources from it is the inevitable result of more people, economic development in China and India creating more consumers, stupid wars that squander resources and devalue currencies, etc...

It would be a looming problem no matter who was in charge, but we picked the worst possible time to let Junior drive.

Looks like you guys are hard to fool. My mother agrees with the inflation camp. She tells me a 10 lb bag of potatos was $2.99 last year. This year, the 10 lb bag is $7. The produce manager shakes his head and blames high fuel prices. Egads!

It's possible cheap credit has conditioned us to ignore inflation. If the cost of a meal goes up, put it on a credit card. The savvy American will shuffle the monthly balance among 0% APR credit cards. Now, I'm wondering who's more savvy, consumer or the government.

Interesting bit from jyl's financialsense.com link: