Originally Posted by
TheBaron Deux
That's OK if you aren't sure. I am. The headline +17% increase is specifically for that hypothetical average consumer. Everyone is going to have their own inflation rate. My housing cost went down in 2020 because I refinanced into a 2.25% mortgage. Housing accounts for typically 40% (weighted) of the CPI. So my cost (and the corresponding portion of my CPI) decreased. My transportation cost increased because I bought a new car.
The point is....that CPI number isn't for you. If you make twice as much as average, it doesn't mean your basket of goods cost twice as much. If you make 6-7 times the average, you aren't paying $18-21 for a gallon of gas, you aren't paying $60 for a movie ticket, and you aren't paying $20 for a bottle of aspirin at Costco. CPI is a tool that doesn't work well outside of +/- 1 standard deviation.
Does the CEO making $100,000,000 a year need a $17 million raise so he can keep up with inflation?
Ok, I was just being polite. You still don't understand or you are just not trying. CPI of course is not for an individual. As I said it is regional at best. No one said the cost of items would double or triple or multiply by the number of times you make over the average. But regardless of how much you make the CPI gives a "rough" idea of how much inflation has impacted "your standard of living". If the CEO makes 100,000,000 then yes he/she will need to spend 17M more for the same standard of living they had previously. The Yachts cost more, the expense to have your private jet fly you around costs more, the taxes on your Estate at the Vineyard goes up. Everything cost roughly 17% more than it did previously. Can you personally offset some aspects of inflation. Of course, you refinanced your house. Your interest expense is now less. However, your taxes are more, your insurance costs more, the repairs cost more, etc. It is roughly 17% for the "most" people. You might be less or you might be more, but as a group the cost is 17%. TC is not being disingenuous. He's using the Gov't numbers. Not YOUR personal number. If your expenses did not go up by 17% over the last three years then that's great for you. Mine is much more, so it sucks to be me. But to say because you make more means your costs don't go up is stupid. The percentage of how much you spend on certain items might be less than someone earning the average national wage, but it total whatever you bought in 2020 now costs 17% more in 2023. That's what CPI means. The average price you paid for whatever in 2020 now cost 17% more in 2023. To keep pace with that inflation your earnings must also increase by 17%.