LEILA FADEL, HOST:
Inflation has cooled a lot since its peak during the pandemic, but feelings about how expensive everything has become have not. As part of our ongoing series Cost of Living: The Price We Pay, Planet Money's Kenny Malone reports.
KENNY MALONE, BYLINE: Every time we go to the grocery store, we see what inflation did to the price of our Diet Coke, our pizza rolls, our Cinnamon Toast Crunch.
(SOUNDBITE OF TIKTOK VIDEO)
ROCKY WALKER: OK, y'all. I might be a unc for real because since when is cereal $8 a box?
MALONE: That is Rocky Walker (ph), age 27, security guard by day, TikTok creator by night. And in this TikTok video, he's standing in the cereal aisle holding a box of Cinnamon Toast Crunch in disbelief.
(SOUNDBITE OF TIKTOK VIDEO)
WALKER: Has cereal always been this high?
MALONE: We called up Rocky Walker.
Did you end up buying that Cinnamon Toast Crunch for $8 or...
WALKER: Hell no. I put it back.
(LAUGHTER)
MALONE: Now, Rocky isn't usually TikToking about economics. But if you're documenting your life these days, money and prices are just part of all that.
WALKER: I feel like with my generation, or Gen Z, like, you know, we're all out here for our first time really just trying to swim. But with these prices, it's so hard to try to, like, budget 'cause this stuff is not cheap at all.
MALONE: What Rocky said about his generation reminded us of what the economic research says about inflation and feelings. Ulrike Malmendier is a finance and economics professor at UC Berkeley, and her research has looked at the sort of generational trauma of living through periods of high inflation.
ULRIKE MALMENDIER: The main emphasis of that research can be typically boiled down to saying, well, give me your birth year. Then I'll get a very good idea of how optimistic or pessimistic you are about inflation.
MALONE: So say you lived in the U.S. during that double-digit inflation of the 1970s and '80s. Ulrike found that this scars people. It makes them more likely to expect inflation in the future. So for me, I'm 41, and for our friend Rocky who's 27, we haven't really experienced inflation until the spike around COVID.
MALMENDIER: You have had a very stable inflation experience much of your life. Suddenly, your world gets turned upside down. It really shocks you so much. So you do these cool TikTok videos about Cinnamon Crunch Toast, which is, of course, a great cereal.
MALONE: Now, inflation to economists is prices going up across the economy. It's measured in the consumer price index, which is put out by the Bureau of Labor Statistics. They have a massive list of things that we pay for. They monitor price changes of that stuff and then blend it up into one measurement which says, here's how much more expensive things are getting across the entire economy. But Ulrike's research has also shown that we humans get our feelings about inflation from just the handful of things we look at and buy every day, like food and gasoline, even though those prices are not necessarily changing because of inflation as economists see it. You know, bird flu devastates the egg supply or OPEC cuts oil production. Like, those things can cause prices to swing, but volatility is not necessarily inflation. And food and energy prices are notoriously volatile.
MALMENDIER: The irony of it all is that as a researcher and as a monetary policymaker, you are always asked not to look at energy and groceries. But we humans, that's basically all we look at all the time when you think about inflation.
MALONE: One final window into our economic souls - other research has shown that we really notice it when prices swing up, but when those volatile items swing back down, we don't notice it in the same way. I mean, Rocky, for his part, certainly noticed when Cinnamon Toast Crunch was suddenly $8. We asked him if he would report live from the supermarket on whether that price had changed at all.
WALKER: They have, like, a deal where, like, if you buy four, you get them for $2 each.
MALONE: What?
WALKER: Yeah. That's crazy.
MALONE: Rocky takes a moment, considers all of this, does not go for it.
WALKER: Four boxes of Cinnamon Toast Crunch just staring there at the top of the refrigerator at me just...
MALONE: All right.
WALKER: Yeah.
MALONE: Fair enough, Rocky. Fair enough.
Kenny Malone, NPR News. Transcript provided by NPR, Copyright NPR.
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