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Inflation
Posted by dsb3 (more from dsb3) on Mon, 17 Apr 2000 10:31:10
In Reply to: , Kok Chen, Sat, 17 Dec 1988 12:00:00

Hope this isn't too off-topic. In regards to the queries about new
car prices and inflation between 1978 and 2000:

>>I know you (and the rest of us) realize that $10k in 1978
>>dollars is more like $30k in Y2K dollars.
>>
>> if someone knows more precisely how much inflation we
>> have had in the last 22 years, please chime in.

This is pretty close. According to the Bureau of Labor Statistics,
http://www.bls.gov/ , the Consumer Price
Index (CPI), a standard

measure of inflation, has increased 155.5% between 1978 and
2000. So $10K of expenditure in 1978 would be cost you
approximately $25,500 now in 2000.

There is not a single, perfect measure of inflation. The CPI is the
most common measure, and it's reported in the news a lot. It's
what the average 'urban consumer' pays for a 'standard market
basket of goods' -- your whole budget. See
http://stats.bls.gov/cpifaq.htm
for details.


> My first Saab cost 8K (It was a leftover). My second 16K
> (Brand new, I should have tried to scroom down more)
> My third looks like it will be 32K. Still in progress.
>
>So, it seems that every time I buy a car, the price doubles.

The CPI online info at the BLS isn't detailed enough to tell the
difference in new car prices between 1978 and 2000. The 155.5%
above reflects a whole 'basket' of goods, so the price of autos
might have increased more than this average. A cheesy website,
http://www.mrtraffic.com/cost.htm
, reports the following:


'A new study by the Detroit-based research firm Polk
concludes that the while the average price of a new
automobile is about $20,000, the cost of owning a car
has remained essentially unchanged over the past 10
years because quality improvements have boosted a
vehicle's life expectancy and owners are keeping the
same vehicle for a longer period of time'

I think there was also an article(s) in the Wall Street Journal last
year noting how many more things come standard (leather, sound,
etc.) now. This is one way that car manufacturers have
successfully raised prices. Since consumers are 'forced' to buy
these items, the total price tag can go up, while the potential
markup on accessories is higher than on the base vehicle.

Derek S. Brown
'83 900T 191,000mi


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