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Explaining the inflation rate
(lemmy.world)
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this post was submitted on 20 Aug 2024
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It's an issue with how inflation numbers are reported and I continue to believe that it's done intentionally to confuse people (or reassure them).
It's reported year on year but people don't plan their finances year on year, they think back further than the last year so inflation should be reported both year on year and with a reference year.
It's funny that other economy stats are actually reported in comparison to major events but not inflation. "The economy has improved X% since the 2008 financial crisis!" is the kind of things that's getting reported, well, inflation should be reported the same way. How much has it increased since January 2020? That's what people are feeling right now, not the 3% since August 2023.
It's specially a problem in the US, and other selected third world countries, where they don't have yearly minimum wage increases to offset inflation. I live in Brazil, and I get a raise that is always higher to the yearly inflation (thanks for my union), so yes, things are higher as ever, but my salary too.
I'm in the US, I've got a solid job, everyone I know says I'm lucky to get raises every year. My raises are still consistently slightly under inflation. Lots of the people I work with don't understand why that means we're not actually getting raises, and nobody wants to rock the boat and risk the small amount we do gain each year. It's wild over here
Annual adjustment or annual + step increment?
Long term the annual adjustment will usually track inflation or be pretty close to it but until you've reached your last step you get two wage increases a year so it feels like you're beating inflation...
Sorry, don't understand the difference. In Brazil the raise is usually signed in March, but retroactive to the beginning of the year. Is negotiated on base of the past year inflation, so technically we're always behind, because we get the rise at begging of year, but inflation is a constant process. There's something I find bullshit and is that the raise is rated by the time you worked on the past year, so if you start working in July, you only get 50% of the negotiated raise. Not sure if it general or something stupid in my union contract.
I think what they meant is if you receive that raise capped or uncapped. Some places have set wage increases based on years worked until a certain ceiling.
So if you have this annual increase and that capped increase at the same time, you might only beat it because of the additional capped increase. That would mean, at some point, your increase in wages will not catch up with inflation anymore
So in most collective agreements I'm used to you have your classification (the job you have) and that classification has multiple pay steps depending on how many years you've been in that classification (usually going up every anniversary of you being in that classification) and the annual increase is separate thing.
When you first get hired you usually start at step 1 and go up once step every year while also getting the annual increase so it feels like your salary increases a lot more than inflation, but once you've reached the last step all that you get is the annual adjustment that's usually about the same thing as inflation, sometimes a bit less sometimes a bit more...
Here's an example:
Every June 1st you get a raise, but you also get one every anniversary for the first four years so it seems like your salaries increases by a lot during that time. Someone hired June 2nd 2017 would go from 61969 to 84045 after four years but someone that was there since 2010 would go from 77764 to 84045 during that time because they had already reached the last step.
Ok, I get it. Nah, there's no such thing as the steps, at least not in my union (insurance workers of São Paulo). You get your annual rise, usually a bit more that the inflation and that it. Anything else is a discretion for the companies.
Interesting, so that would mean a new employee starts at the same salary as one that's been the for ages?
Or less, and is always behind 🤷♂️
Well then people might start asking questions like why X is up Y% but the ingredients for X have only gone up Z% in total
But people are already wondering that...
They think people are too dumb to understand that zero is not the target for inflation. They want to make the good news they're reporting sound like good news.
You can disagree with their approach, but where they're coming from makes sense. After all, the OP in the screenshot exists.
I think it's reported that way because traders and other people adjacent to the financial sector are trying to figure out when the Fed is likely to lower rates. I don't really see inflation numbers reported outside financial articles.