Inflation Is the Tax on the Poor … and in the Us Their Poverty Is so Expensive That They Already Have Their Own CPI (Part 2)

But for better or worse, with more inflation or less inflation, with debate served on its suitability or without it , with a weighting or another according to countries or seasons, with one objective or another, without denying them the possible intentionality that may exist in the distortion of the measure of this macroeconomic parameter, the truth is that we have (today) no better way to measure the evolution of prices. We like it or not the certain deviation of the direction that the compass points, if we want to go north, it is better to move a little towards the northwest, to take a southern direction without even being aware of it: this inflation that we They give our economic institutions every year is the only compass we have to navigate the frizzled sea of ​​prices (and it is clear that from here we can be quite critical in terms of (sometimes) illusory indicators.

And it is that this acclaimed CPI index has a realism more than nuanced. Scandalous flaws in it were for example that the evolution of prices in the real estate bubble (living in the property as a basic and usual property in Spain) was not reflected in a galloping CPI, or that its formula of shameful change was changed calculation with the entry into circulation of the Euro. This last failure, suspiciously, made it impossible macro-economically to be able to compare what “ablaze” we were given to consumers with the very significant price increase brought by the single currency.

Without going any further, remember how for example a coffee automatically went from costing 100 pesetas to costing 1 Euro (166,386 pesetas) with a high of more than 66%, and three quarters of the same happened with the price of the loaf of bread or of so many other products, many of a basic nature, whose galloping inflation in the heat of the Euro was buried in the annals of the most (in) timely econometric re-formulation. Paradoxically, if the CPI had continued to be calculated according to the same formula at the entry into circulation of the Euro, it was very likely that its upward explosion could have even led us to theoretically remove it (according to the levels of the indicators that were then monitored).

Inflation is a hidden socioeconomic tax

But assuming that we must inevitably leave from that involuntary point of consummate econometric events as if this weren’t enough, now comes the most dramatic part. And in the end, for those less wealthy classes (I prefer this denomination to that of the title, inherited from the news linked today), which generally in a tax system to use are charged much less than personal income tax, or that even they are exempt from reporting in cases of especially low income, there is another tax from which there is no way to escape: inflation. That inflation that erodes their already diminished purchasing capacity, and to which salaries generally only equal in percentage in the best case (except for exceptional situations of harmful regrowths of wage inflation and overheating of the labor market that is no longer seen nor they are reminded).

And as we said before, the compass of the CPI, despite its obvious deviation of some degrees, is essential to us to mark the economic direction to follow. Today’s issue is related to it, but it is another very different one and brings up another very significant aspect whereby this “solidarity” inflation, which applies equally to all consumers, is deeply unfair and asymmetric. , since it is obvious that homogenizing and putting all social strata in the same IPC shopping basket is totally artificial. Indeed, a multimillionaire does not buy the same goods and services as a chain worker, so the inflation that each one supports eroding their purchasing capacity has nothing to do with them, nor does it have much to do with the national CPI of the news.

In societies where the middle class is predominant and provides that essential degree of socioeconomic sustainability that we always affirm that it contributes in the longer terms, the distortions are minimized and can become “tolerable,” despite their asymmetries. But the timely question is neither more nor less, and what happens when this is not so? What happens when a relevant part of the population has a buying capacity (and an IPC basket) radically different from the official one? How can these citizens be as first-class as any other being aware of what purchasing power they lose each year with inflation? The only answer to this macroeconomic and econometric need is that those less favored classes have their own CPI index, which weighs and measures the price evolution of their modest average shopping basket.

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