Inflation and the “burrito index”

I’ve written often enough about inflation here, most recently last month.  It’s a serious and growing threat, particularly because the government persistently and deliberately understates the actual rate of inflation, so that it doesn’t have to pay out so much in inflation-linked indices.  On that same date, I embedded the video below, in which Ed Butowski explains why he created the Chapwood Index to give a more accurate, more realistic understanding of the real rate of inflation.

Now, Charles Hugh Smith (whom we’ve met in these pages before) updates his “Burrito Index” measurement of inflation.

Long-time readers may recall the Burrito Index, my real-world measure of inflation. The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016). The Burrito Index tracks the cost of a regular burrito since 2001. Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the cost of a regular burrito at our favorite taco truck with great accuracy: the cost of a regular burrito has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.

It’s time for an update: the cost of a regular burrito has now reached $7.50, triple the 2001 cost. That’s a 200% increase in 17 years. According to the federal government, inflation since 2001 has risen about 40%: what $1 bought in 2001 now costs $1.43, according to the BLS Inflation calculator.

The Burrito Index is five times the official inflation rate … Lest you reckon only burritos have tripled in cost since 2001–have you checked out college tuition or rents lately?

. . .

Welcome to debt-serfdom, the only possible output of the soaring cost of living for the unprotected who are ruled by a hubris-soaked, Protected Elite. Our job is to shoulder the higher prices by taking on more debt–debt which is immensely profitable for the Protected Elite.

Here’s what you’re supposed to swallow: big-ticket expenses such as rent, healthcare and higher education cost tens of thousands of dollars more, but TVs cost a few bucks less, and as a result, official inflation is 2.1% annually.

As long as we accept this travesty of a mockery of a sham, we deserve what we get.

There’s more at the link.

A 200% increase in prices in 17 years?  That squares very well indeed with my earlier estimate that “Our incomes are being reduced in purchasing power by approximately 10% per year”.

Folks, as I’ve said many times before, debt, inflation, and all their concomitant problems are killing us, economically speaking.  If you’re not working all-out to reduce your debt and live within your means, this whole mess is going to come crashing down upon you within a measurably short space of time.



  1. I am debt free, but if the only reason for financial decisions were beating inflation, you are better off taking on high debt at 3 or 4 percent and paying it off with inflated dollars

  2. The CPI is an utterly useless metric of inflation. I think it is manipulated artificially low in order to reduce cost of living adjustments to Social Security.

  3. Debt free! After over a half century of owing money on just about everything, no more!

    I have no desire to go out and buy stuff I don't need, already have what I want anyway.

    I did upgrade my two monitors to the latest and greatest. (totally necessary)

    Hell, I can go up to the casino and spend a couple hundred bucks and not even miss it. And maybe one of these times I might hit a jackpot.

  4. I worked with a fellow, Ed, who used to teach politcal science at a university in California.
    He bailed from the politcal science field and began working consruction.

    Ed had posited there would not be another revolution in America until the cost of a sixpack of Bud cost more than one hour of labor at minimum wage.

    Smart guy.
    Maybe that is why progressives keep upping minimum wage even though they now it hurts the economy.
    They wouldn't want the beer to labor ratio to get out of balance.

  5. The way to crush the bourgeoisie [middle class] is to grind them between the millstones of taxation and inflation.

    – Vladimir Ilyich Lenin

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