Here is my simple definition of rampant inflation: you're paying a lot more money for the same item/service but the quality/quantity is the same or lower--and your income is stagnant/declining. We are constantly told that inflation is near-zero, but the basket of goods selected for measurement seems not to include healthcare/health insurance, college tuition or property taxes.

These costs are skyrocketing, and they are non-trivial expenses, running into the tens of thousands of dollars per year. I have addressed the difference in scale of expenses for the wealthy and the "middle class" before. For instance, $10,000 per year for healthcare insurance is a massive percentage of the after-tax income of a household earning $60,000 a year, while it is a modest percentage roughly equivalent to the sums spent eating out and traveling for a household earning $160,000 a year.

The same scale differences are present in all measures of inflation. Onions might well have declined over the past year, which means that the $30 I spent annually on onions declined to $29--a grand savings of $1.

Even a 10% decline in natural gas costs would only yield a modest $50 reduction in costs for my household. Let's say another household consumes a lot more natural gas, and their savings would total $200 a year.

Compare these modest reductions due to deflation with the thousands of dollars in increases in big-ticket items like tuition, property taxes and healthcare.

Take property taxes. Nationally, according to the Census Bureau report on state and local tax revenues, total property taxes in the U.S. rose from $225 billion in 1998 to $476 billion in 2009 -- an increase of 111% over a time period that saw costs rise 32% (i.e. Bureau of Labor Statistics calculated inflation from 1998 to 2009 at 32%).

So nationally, property taxes rose at a rate that was triple that of inflation.

My own property taxes rose 25% from 2004 to 2010, while inflation in that period was officially 16%. So my property taxes rose at a rate that was 50% ahead of inflation. This is for property in California, supposedly protected from increases above 1% per annum by Proposition 13. (Local voters can approve additional parcel taxes, and they regularly do when presented with "save our schools, libraries, etc." tax increases.)

These increases amount to several thousand dollars a year. Medical insurance (stripped-down basic coverage from Kaiser) and our property taxes take a huge percentage of our after-income tax income. Whatever items now cost less than a few years ago are essentially trivial in cost over a decade (how many TVs am I going to buy every decade?), while the increases in healthcare and property taxes amount to several thousand dollars a year. Together, those increases above the "official" low rate of inflation add up to $50,000 over a decade.

Here is a typical example of how property taxes have doubled in the San Francisco Bay Area (this is not our house, but one picked from zillow.com):

A modest house valued at $270,000 in 2004 paid $5,090 in property taxes. (Please note California is a "low tax state," according to those anxious to raise all state taxes.)

The house was sold in July 2005 for $725,000 (near the top of the bubble) and property taxes promptly jumped to $10,977. By 2010, taxes had climbed to $12,193: a grand a month.

The utility value of the house remained unchanged. There was still the same number of rooms and square footage. The owners received no "hedonic" improvements; they're just paying $12,000 annually in property taxes instead of $5,000.

Tuition to the public universities and colleges in California has skyrocketed. Tuition to attend the University of California system was $1,820 annually in the 1990-91 school year; the tuition for the 2011-12 academic year is $12,151.

According to the BLS inflation calculator, $1 in 1990 equals $1.67 in 2010. If UC tuition had matched inflation, then tuition should now be about $3,040 a year, not $12,000.Tuition has quadrupled, even when adjusted for inflation.

The State University system has also seen tuition jump:

So while clothing and electronics may have declined by a few hundred dollars a year per household, tuition for a four-year university now costs $40,000 more -- and that's not counting student fee increases. So while a laptop might be a few hundred bucks less, and clothing might be a little less, it costs $50,000 more to send your child to a state university. That is not "low inflation."

As for healthcare--if you buy your own healthcare insurance as a business owner or self-employed worker, then you know the drill--huge annual increases, year after year, recession or not. Our household medical insurance costs have doubled in a few years, and that's for stripped-down coverage (no dental, eyewear, drug coverage, etc.) and higher deductibles on every category.

Add the thousands of dollars more per year for property taxes and health insurance, and you are talking sums of money which are orders of magnitude greater than the modest reductions in expenses for other items as measured by the Central State. Most households are reaping extremely modest savings on clothing, electronics, and the other items which are a bit cheaper, while the increases in healthcare, property taxes and education are running in the thousands of dollars annually.

I may have saved a few dollars on onions and shirts, but we are paying $5,000 more per year for property taxes and healthcare insurance. If these costs were increasing at the official low rate of inflation (1.1% per annum), then they would be registering increases of a few hundred dollars every decade, not thousands of dollars more every few years.

"Low inflation" doesn't add up when you consider the tens of thousands of dollars in increases stacking up in tuition, taxes and healthcare. I have addressed some of these issues before:

Does Healthcare Reform Address Rising Inequality? (September 17, 2010)

Wall Street's "Recovery" Leaves Main Street Mugged in the Gutter (November 17, 2010)