The government has been slowly devaluing your currency for ages and they changed the way they report inflation to keep you in the dark. I came across this article today which looks at the way the government used to report inflation, and if they still did it this way today inflation would be over 10 percent, which seems in line with what I'm seeing in my day to day expenses. article
Peter Schiff talks about how the government reports inflation quite a lot in his book Crash Proof. I've been a big fan of Peter Schiff, though I find it sad someone who saw the stock market crash coming couldn't make a profit from it, but I digress...
Another piece of evidence for inflation if through the permanent portfolio. The permanent portfolio divides assets into 5 categories and equal weights them. Precious metals, commodities, growth stocks, treasuries, and swiss franc assets. The ticker is prpfx. It's a mutual fund based on the Harry Browne concept of the permanent portfolio.
This fund is designed to beat inflation by a couple of percentage points. Why has it been on fire the past decade? It's because inflation has been a lot higher than people want to believe in my opinion. It's done it's job staying ahead of inflation by a couple of percentage points. Sure the chart looks like the fund is kicking @#$ and taking number but not so much when real inflation is taken into account. It probably demonstrates that people are afraid of the prospect of their long term savings losing value.
We are becoming poorer every year without realizing it. The sad thing is that when the government is forced to stop printing money things are going to get ugly because we will face the implosion of our service economy. It's a no win situation.