Skip to main content

Inflation -- its tricky to calculated

Lets say that 10 years ago I wanted to fly to Chicago from Montreal -- I call my travel agent (in my case AMEX) and they would book a flight and I would be charged by AMEX.  The rate was the rate and is in Sleepless in Seatle "no one knows what the airline charges". However, for inflation purpose, the data was available to the government's statistical office.  Taking a large number of Flight Montreal to Chicago you got a price for the flight!

Now move the clock to 2018, you want to buy a flight from Montreal to Chicago, you take your phone and open Expedia and take the flight that fits your requirement!  That data also goes into the government statistical office.

Now comes to fun part, you've got to provide additional information; at the same time the airline charges you for extra benefits:  Want food on board, want a better seat, got luggage?  All these are now additional fees (and sometimes for a substantial amount of cash).  So a plane ticket that cost $300.00 is now looking more like $475.

Are these figures included in the travel costs?  Funny enough they are not.  So today when the CPI came out (for the US) two items saw price falls -- airline and hotel.    The first made no senses since fuel costs have risen quickly and they account for nearly 30% of an airline's operating costs.  The hotel is harder to figure out.  Inflation on hotels turned negative 4% last month (annualized basis) which is the single largest drop --- no one has explanations for that.

However, if you go on the internet there are a lot of comments on how hotels have started charging for "extras" that were "free" in the past -- from parking to extra beds in the room.  I don't know how much of this is an urban legend or a real shift int he business model.  I know that's how cruise ship function -- giving you a 7-day package to which you add "goodies". 

Anyway, fun stuff!




Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more