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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (42629)	10/5/2005 11:32:34 AM
From: GraceZ	Read Replies (1) \| Respond to of 306849

I've had a few months where I thought inflation was getting a foothold only to see it beat back down. I do a detailed household budget as well as keep receipts, including grocery, which are very helpful because they have the item names so I can do same item comparisons. I have this discussion at least once or twice a year with someone so it gives me the opportunity to pull out my own data and check to make sure it still holds. What most people see as inflation has to do with them continually ratcheting up their lifestyle or they live in an area that has greater than average inflation because they live in a wealthy area. I live in a wealthy area but I'm close enough to an area which isn't to do my shopping, we have a Walmart Superstore and many other retail outlets who are locked in fierce competition. I use the web to shop. This holds down prices for us. Don't get me wrong, I'm not arguing that inflation doesn't exist, it does, but it is at a fairly predictable rate. In my experience, the CPI overstates inflation slightly. Even at a very low rate inflation is insidious in the way it erodes your lifestyle if your income doesn't adjust. We've managed to keep raising our standard of living because my husband's income has more than outpaced the official CPI by several points (the commercial construction industry is booming here) even while my income came down quite a few pegs when my business went through a major shift. His regular raises and the windfall of having interest rates fall so sharply has allowed us to raise our standard of living over the last ten years. It would take a great deal of inflation to undo that one time windfall of a refi from 7 to 5.25%. I think I figured out that in order to erase the one time gain we received from falling interest rates in my own household (which is extremely modest by American standards) it would take 17 years of gasoline at this level!