Sunday, November 21, 2010

Inflation: Lying Low, or a Big Lie?

     The federal government released its inflation numbers last week, showing that over the past 12 months the overall Consumer Price Index went up by only 1.2 percent and the Core Price Index (which excludes food and energy) increased by a scant 0.6 percent. Less than one percent in a year. Most (not all) experts agree that inflation levels in the U. S. are at their lowest levels in more than 50 years. Because of that, for the second year in a row, retired people will see no increase in Social Security payments.

     But reading inflation reports gives me a major case of cognitive dissonance. The government tells me there's no inflation. But, somehow, my bills keep going up! And it's not because I'm buying more stuff. It's because prices keep rising, especially for the biggest items in my budget.

     My biggest bill goes for college tuition for my daughter. She gets some loans and a small scholarship, but I pay most of it. For the fall semester her tuition increased 5.7 percent.

     The second largest bill is my real estate tax. This year it went up less than usual. But it still rose 1.8 percent, and that's 50 percent higher than the CPI and three times the core rate.

     My third largest bill goes for medical insurance. My last rate increase swelled up by an alarming 17.3 percent.

     Prices for a lot of other things seem to cancel each other out. The electric bill perked up a little; the heating bill simmered down a little. Prices at the grocery store are up. Prices for computers are down. Maybe if I ate less, and bought more electronic doodads, my cost of living would match up more closely with what the government tells me.

     Am I crazy? Am I imagining things? What about you? Is your inflation rate 0.6 percent? Or do you have a case of cognitive dissonance like I do?
 

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