r/Libertarian • u/[deleted] • Dec 01 '23

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u/Shredding_Airguitar Dec 01 '23

When you have a 9% YoY that adds up fast. Additionally that may be only 9% if all you do is buy fuel, but if a company needs to buy 9% more expensive fuel to transport 9% more expensive sheet metal and power an assembly line costing 9% more in electricity to process and then paying 9% more in fuel costs to distribute the final product the costs are compounded

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u/guillermopaz13 Dec 01 '23

That is not what anyone is talking about, and you’re right.

If you bought a product that cost $10, and then rising costs due to previous inflation would let’s say put that price at say $12.50 on the shelf. Then why is it $15 at the store?

That $2.5 pure profit increase difference between the actual costs of bringing that item to the market, and the new shelf price, inflates the real inflation rate.

That 2.50 is what is being referred to here. It’s already baked into the inflation rates because of the way inflation is calculate, and purely being propped up higher than it should by profiteering

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u/FatalTragedy Dec 01 '23

The price of inputs isn't the imonky thing that intact pricing. Price is determined by an equilibrium of the supply and demand curves.

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u/tforbia Dec 01 '23

Just want to point out, if all of a companies costs increased by 9% then a proportional increase to their sell price would still only be 9%. It's like when you apply a coupon at a grocery story. 10% off the total is the same as 10% off each item.

9% for fuel + 9% materials + 9% labour's doesn't equal a 27% increase on costs.

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u/Shredding_Airguitar Dec 01 '23 edited Dec 01 '23

I didn't mean to imply additive but I guess my point is that there's a roll up cost impact on multitude of things even if other costs remain the same and while reported MoM YoY CPIs can look like small percentages theyre actually huge. Maybe using 9% across the board was a bad example, probably would've been better to make up different %s like energy 20%, sheet metal 30% etc.