ECONOMICS:

THINKING INFLATION

How can most housing costs, property tax costs, education costs, insurance costs, food costs, or energy costs be excluded as factors in the inflation computations?

In the past four years the Real Estate taxes on my 100+-year-old property have increased well over $1,500. These taxes now account for over 25% of my total expenditures for the entire year. My various insurance premiums now account for over 15% of my expenditures, and every renewal brings more exclusions/exemptions from the coverage. Energy/utility costs now account for another 20% to 25% of yearly expenditures. My weekly food costs have risen 50% over the past four years for the same items and quantities. I don’t TH*NK my household is that much different from most others in this regard when I figure that my personal inflation rate has been running 12% to 15% per year – a far cry from the official BELOW 3% currently hawked by Uncle $ugar.

Last week I heard from my Alma Mater, the University of Illinois at Urbana, that Fall 2007 tuition would be raised to $204 per credit hour. My total tuition there in Fall 1968 was just over that for the entire two-semester course load of 32 credit hours—a cumulative increase of 3,200% over the 39-year-time period. The State of Illinois’ share in picking up the costs of elementary and secondary education costs has dropped from over 50% to less than 30%, so the schools must reply more on local property taxes to fund education, just as the state universities must rely more on tuition payments.

I also just heard from the gas company that if I wanted to go on the “budget plan,” it would cost me $129.00 a month – up $35 a month, or 37%, from the very same proposal of only just two months ago. What does that say about where energy costs are headed for the coming heating season? An annualized inflation rate of under 3%... who are they kidding?

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2007 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.