I think it's time this sub gets more international, so it's Canada's day of shame.

Here we have /r/PersonalFinanceCanada having a very robust discussion about inflation. For a subreddit focused around money, I expected better. Unfortunately for them, a lot of bad economics took place and I have some leftover vodka from my camping trip.

The original link was to a restaurant owner claiming he has seen high inflation. Let me be clear here; that is not the bad economics (honestly, I didn't even watch the video). CPI is not meant to reflect the inflation experienced by a business owner, and for a few reasons it's very possible he has experienced significantly higher inflation (not the focus of this though). The bad economics came from the many comments that followed. Picking just one to R1 would be too difficult, so we'll do a bunch of them (basically until I run out of vodka).

Before we get into it, let's get a disclaimer out of the way. Any individual can (and likely will) experience inflation that is different from the official rate. It's entirely possible one individual could have experienced inflation significantly higher or lower than the official rate.

Let's start with OP ( /u/glouglou_ ):

Absolutely. It's almost bizarre that the central bank says inflation is weak. Houses, rent, and food have seen huge inflation and those are the two bigger items for many Canadians. Who cares if electronics, gas, and whatever else are at 2% inflation or even negative. Half our expenses are higher!

First of all, house prices are excluded from Canadian CPI.

I don't really understand their point in the second part so I'll leave it at that. I also have this chart showing inflation by product category (mainly just for fun):

https://imgur.com/a/poIpB3J

(Note that some categories have overlap here. Gasoline is also a subset of Transportation. Energy includes items from multiples aggregates, including gasoline again)

(2002 is the time base used by Stats Canada, so I just start at that year in most cases)

/u/senorbrian comment:

I agree for pretty everything other than sweatshop clothing prices have gone up 5-6% a year in the past 10 yesterday we are now one of the most expensive countries in the world, I was in Paris last year and found it reasonably affordable compared to life in any major Canadian city

It is true that clothing has experienced lower inflation than other categories, as seen in the chart above. However, it is absolutely not true that "everything else" has been going up 5-6 percent per year for the past ten years. The next chart is a bit cluttered, but you can see that in fact, barely any categories other than gasoline / energy (which are known to be volatile) have exceeded 5% annual inflation in the last 10 years.

https://imgur.com/a/Bdcr8Gv

This is likely easier to digest in table format, where we can view the average inflation rate of the different categories for the past ten years.

Over that time period, not one category averaged even 3% inflation, much less 5 . We can go even further though, and create a CPI measure that specifically excludes clothing.

I've had a couple drinks in at this point, but I'm 75% sure I got the weightings right here.

https://imgur.com/a/nB9O2VM

For most of the period, "Clothing & Footwear" exerts downward influence on the CPI. However, it never amounts to more than a small fraction of a percent. Clothing & footwear is only weighted at 5-6 percent, so it should be obvious it carries pretty little influence on the overall CPI rate.

/u/eskay8 comment:

One thing that's actually not accounted for in inflation calculations is that stuff is shittier these days. Stuff breaks so easily and you can't repair it. Clothing falls apart if you look at is wrong. The quality of cheap food has gone down too and I don't think it's just that my standards have gone up. Chicken breasts and pork tenderloins have almost no texture in them.

The CPI actually does make quality adjustments--although these adjustments can be difficult. Kryvtsov (2013) can give us some assistance here in determining the influence of quality adjustments:

I find that less than one-third of observed price increases during model changeovers should be attributed to quality growth. This implies overall price inflation close to inflation measured by the official index. I conclude that, according to Bils’ methodology, the quality bias is not an important source of potential mismeasurement of CPI inflation in Canada.

So two take-aways: 1) quality has improved according to these adjustments, and 2) it doesn't matter that much though.

I'm out of vodka, so end R1.

EDIT: Pictures didn't work. Put them on imgur.