Inflation? What inflation?
Pundits are fretting that prices are poised to surge out of control. They are partly pointing to Friday's report that The Consumer Price Index increased 0.4 percent in April, pushing up the 12-month rate to a whopping 3.2 percent.
The worry warts then fret that this is the biggest 12-month gain since October 2008.
Never mind if you exclude food and energy, prices rose just 0.2 percent for the month and just 1.3 percent this year. Granted, that is double the increase just six months ago.
Now, some worry warts say you should include food and energy since people use this stuff on a regular basis. Fine, let's include it.
But, let's look at the reality of how they are purchased.
Let's start with food. Yes, if you are a lousy shopper, food prices are going up. But, if you care just slightly how much you pay for things on a regular basis, the food inflation figures are what are inflated.
Every week scores of items go on sale in supermarkets. Wise shoppers then stock up on items they regularly use.
So for example, I am paying less-or the same-for many items I use on a regular basis. They include yogurt, orange juice, pasta, chicken, tomatoes, chumus, ice-cream, tuna. I can go on and on.
Plus, many people then use coupons to further lower the price.
Let's move over to energy. Specifically gas prices. Yes, they have been surging. Can't argue that one. However, not everyone uses a lot of gasoline.
Many people regularly commute to work by mass transit. So, when they drive their cars, they are not using that much gasoline.
People like my wife changed jobs from one requiring expensive suburban mass transit to a car requiring her to use just a half tank of gas per week. Even with gas prices rising, she is spending much less on commuting to work this year than last year.
Meanwhile, housing prices are still weak. So, if you buy a house or a condo, chances are you are paying less than you would have a few years ago.
Plus, financing costs are still historically low. So, your monthly payments for a home are much, much lower thyan they would have been had you bought four years ago.
Where does that show up in the inflation data? And the money you spend each month on a mortgage far exceeds anything you might spend each month on food and gas.
Now, let's move over to another historical source of inflation-wages. How many people got large raises in each of the past three years? I thought so.
Know anyone who got a new job lately? Chances are they are being paid less for the exact same job than they would have been paid had they gotten it a couple of years ago.
Meanwhile, The Philadelphia Federal Reserve's second-quarter survey of forecasters showed the jobless rate only dropping to an average 7 percent in 2014.
Bottom line: Inflation fears are inflated.