This describes a loss of purchasing power, inflationary by definition.
Not true. Your definition of inflationary is too simplistic. It would be more accurate to say possibly inflationary. If energy prices go up, and you have to pay that increase, and you have the same amount of money, then you only have less money to buy other things. Your purchasing power is the same -- the amount of money you have. All that has happened is that you have fewer choices on which to exercise your purchasing power.
By view is that inlation is higher than is tracked in official CPI figures. The higher med costs, housing prices, and even food costs are not offset by lower computer costs and declining big-screen prices.
Housing costs, if you have bought your home, is not inflationary and it is not even used in the calculation of inflation. This is because housing is treated as an investment, not an expense. Rent, on the other hand, is not an investment (except by the person who owns the rental property); therefore, rent is included in inflation calculations.
It is not necessary that computers, and TVs, and even cars, have to go down in price in order to compensate for those things which go up in price. In addition to price, inflation calculations also take into account the improved value of products -- reliability, quality, features, esthetics, comfort, ease of use, maintenance cost, life expectancy, etc. For instance: if a $2,000 computer of today is compared to a $2,000 computer of five years ago, the cost basis of the new computer will be reduced as part of the inflation calculation in order to account for the higher speed, larger memory, bigger screen, improved (bundled) software, greater energy efficiency, etc. Another good example would be to compare today's Volkswagen with the first Beetle of the 60s. It would be unfair to simply compare cost and not take into account that the first Volkswagen was not much more than a pregnant roller skate compared to today's version. |
