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Inflation ripples through the economy. For the second straight month, the overall rise in costs of goods and services slowed in November, up 7.1% annually versus October’s 7.7% reading. In a minute, we make sense of it all, breaking down inflation into individual items. But first, that ripple effect. Tipping Does inflation affect how much or whether or not you leave a tip? Speaking for ourselves, we say yes. Even if you’re doing well financially, you might not be as generous with the tip when the once $8 pint of beer now costs $10.50, the $1.25 street taco sets you back $2.50, or the $2.99 container of cherry tomatoes goes for $4.49. All true stories we witnessed near The Juice’s LA outpost. When you suspect establishments are using inflation as an excuse to raise prices more than they mathematically need to, you might take it out on the service worker who relies on tips. Or you might be less likely to tip if you think the person serving you owns the store. 2022 data on tipping lends support to these assertions. The chart below shows the percentage of people who always tip workers, by industry. Source: CreditCards.com Always tipping is down across most sectors since 2019. It varies considerably by generation, with Gen Z tipping 26% of the time, on average, versus 24%, 20%, and 19% for millennials, Gen X, and baby boomers, respectively. The breakdown in the chart above is interesting:
Something to think about next time you’re on the tip screen or in that face-to-face moment of truth with the bartender, barista, or server. |
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Inflation |
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Stepping Into the Inflation Weeds |
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Key Takeaways:
Most stories on inflation report the headline number. Like we did at the start of today’s Juice. A handful go a step further looking at inflation minus food and energy costs. Few break it down even further. And that’s a shame, because taking inflation line by line paints a more realistic picture. So let’s go deep in the inflation weeds. We write about the cost of rent a lot. November data shows it’s down year over year. But this week’s inflation report shows it’s up 0.7% month to month. This is because the rent data the government collects lags by a few months. So overall, actual inflation might be slightly lower than that 7.1% number. We also love to talk about food in The Juice:
For specific items, eggs take the cake:
Being healthy and making your own salad is persistently more expensive:
One of the biggest price crashes is in used vehicles. After a meteoric rise, the cost of a used vehicle is actually down 3.3% annually and 2.9% monthly. As for travel:
The Bottom Line: While headline numbers are nice, they don’t mean much at the individual level. For example, gas prices are down 2% monthly and 10.1% annually. Means something to everybody, but not as much to you if you don’t drive. Electricity prices have started to moderate. They’re down 0.2% monthly but still up 13.7% year over year. While utility prices can affect food costs, they don’t mean as much to you if your rent includes utilities and your landlord doesn’t have the pricing power to raise your rent. You gotta dig into the fine-grain data the government publishes. It can help us make decisions for our pocketbooks better than any headline in the 24-hour news cycle. |
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