Cooling Inflation? Check the Real Numbers

Does it feel like the cost of nearly everything is on the rise or not coming down? Just when a commodity comes down in price, another one creeps back up? Gasoline and diesel prices at the pump are on the rise again to cite one example.

Employers and employees are feeling the strain and may be wondering why most members of Congress and the White House don’t seem the least bit alarmed. One reason: The most common measurement of inflation the government — and the mainstream media — leans on is woefully inaccurate.

Back in 1983 — a period of high inflation and high interest rates — the Bureau of Labor Statistics changed how the consumer price index (CPI) is calculated. So these days, one financial talking head after another is telling CNBC viewers that inflation is hovering around 3% and any day now the Federal Reserve should start cutting rates.

The reality regarding inflation couldn’t be more different, according to the financial watchdogs at The Kobeissi Letter: “According to the pre-1983 CPI calculation method, inflation is nearly TRIPLE what current CPI data says. If you used pre-1983 CPI, inflation peaked at 18% in November 2022 and [it] currently stands at a whopping 8%. Under this method, housing inflation more than DOUBLED since 2020 alone. Even in August 2023, this CPI inflation method would’ve put inflation at 12%. Perhaps this is why there is such a large gap between headlines and reality.”

Reef Insights estimates the dollar lost 98.4% of its value since 1959. Reef factored in year over year CPI and personal consumption expenditures price index (PCEPI) data to arrive at its conclusion.

Putting the Squeeze In Perspective

Kobeissi is keeping tabs on the price explosion in consumer items. More than 100 food items sold at grocery stores increased in price by 50% or more since 2019. Kobeissi says the “average American is now paying nearly 40% more for groceries than what they were paying in 2019.”

Here’s a sampling of 15 food item cost increases since 2019:

1. cocoa: +345%
2. orange juice: +260%
3. olive oil: +219%
4. sugar: +120%
5. fruit snacks: +77%
6. cooking oil: +54%
7. chocolate bars: +52%
8. applesauce: +51%
9. beef: +51%
10. mayonnaise: +50%
11. loaf of bread: +42%
12. eggs: +40%
13. milk: +40%
14. cereal: +38%
15. butter: +24%