Unless you've been living under a rock lately, you are aware that inflation has risen across the past 12 months. The U.S. Bureau of Labor and Statistics claims that consumer prices are up 8.5% as of March, 2022. They further claim that this is the largest 12 month increase since December 1981. When we drill down further, they also mention that food prices rose 8.8%, food at home rose 10%, and energy up 32%, with the special mention of gasoline pricing rising 48%.
Really, if you look at all of these numbers, the 8.5% quote is artificially low, as it doesn't take into consideration the things that affect us the most, i.e. food, energy, and housing. Honorable mentions go to new car pricing (12.5%) and used car pricing (35.3%).
Now, all these numbers aside, let's just assume that for the typical US consumer, the real inflation rate is greater than that 8.5%. Everybody's situation is quite different, obviously, based on things like your spending habits, needs, area you live in, etc. If you own your house outright and don't need to buy a vehicle this year, your rate of inflation will be one thing. If you're renting and you need to buy a car, either new or used, your rate will be quite different.
Now, since we all know these esoteric numbers by heart, I'm proposing a very simple inflationary index for myself. For those of you who know me or have watched my videos or read anything that I write, you know that I love margaritas. And since I've perfected the recipe for margaritas, there are a few things that directly affect me. Firstly, the price of limes at the grocery store, and secondly the type of tequila that I put into my margaritas. I'll be combining the average of those to give you "Jay's Limeflationary Index," or "Limeflation" for short.
In March of 2020 limes were going for $0.33. Last time I hit the grocery store they were $0.72. Amortized over 2 years, the real rate of that inflation is 27%. And my favorite tequila, Husongs Platinum, was going for $55 for 750ml in March of 2020. Now it retails for $69. That equals a markup of 10.1%. Average those two inflation numbers and you can see that for May of 2022 the Limeflation Index is 18.55%.
Is this a worthwhile number? Should anybody care? Is this tone deaf of me to use these particular markers? Who knows, who cares? Either way, everything is more expensive than it was two years ago. I have my theories on why the cost of everything has skyrocketed, and my two big theories revolve around monetary supply and the artificial cap on energy production and transportation that has caused us to more heavily rely on distasteful countries in order to get our energy fix. Energy is baked into every cost, as there is nothing you own or use that didn't get somewhere via energy, or get built because of energy. But I digress.
What would you use for your own personal inflation index? What markers make the most sense to you? Or for that matter, what markers entertain you more? That's probably the only thing I care about now, because we're all getting an ass kicking from inflation. Might as well have fun with it.
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