"Are real incomes better than reported?"
just ONE thing (of many) to consider ahead of 830a CPI, from UBS
Ahead of this mornings CPI which is said to solidify JPOWs hawkish turn (see U.S. Eco Brief: 1982 High CPI to Cement Fed Hawkish Turn from Bloomberg for more), I thought this, from UBSs Paul Donovan, was worth sharing.
Are real incomes better than reported?
On a simple calculation, households in most countries have seen their spending power fall this year—household income growth has risen a modest amount, and consumer price inflation has risen more. However, consumer price inflation does not measure an individual’s cost of living, and most people have more spending power than the headlines suggest.
In the United States, every year, around 85% of the population chose not to buy a car (new or used). That leaves 85% of US consumers unaffected by car prices. But consumer price inflation is affected by car prices this year. In October, car prices have added around 1.25% to US consumer price inflation—but only car buyers feel the effect.
The rise in car prices is bad news for people who had an overwhelming urge to acquire a 2001 Honda Civic. It does not affect the spending power of the overwhelming majority of the population. US consumer spending power is significantly higher than implied by consumer price inflation.
Of course, the difference between cost of living and consumer price inflation can work the other way. UK package holidays are recorded as having a modest 1.9% inflation rate—but that does not include the costs of innumerable COVID-19 tests that are now required for travel.
Emphasis MINE. He ALSO goes on to offer The Truth About Inflation (do corporates have pricing power any more?)
So BEFORE panic on MSM ensues AFTER this mornings sure to be HIGH CPI, check garage or driveway FIRST and THEN consider price at the pump as well as those eggs and coffee (with milk) you had for breakfast before the data…
UN FAO Food Price Index HERE or this, from St Louis FRED