Latest / Inflation Explained with Fexingo: CPI, Prices, and the Cost of Living for Everyday People / Why Your Streaming Bill Is the New Inflation Signal
Transcript
- Lucas: So it's the Saturday before Memorial Day, 2026, and consumer sentiment just hit an all-time low. Not a cycle low — an all-time low, dating back to the 1950s. Luna: And that's despite headline inflation cooling. Core CPI is at 335.4, up from 334.17 a month ago — still elevated, but not spiking. Lucas: Right. So there's this disconnect between what the data says and what people feel. And I think one of the most interesting places to see that gap is in something nearly every American pays for every month: streaming services. Luna: Oh, this is good. Because streaming prices have been creeping up steadily, but it's not like the government tracks a 'streaming CPI' component. Lucas: Exactly. Let's look at Netflix. In early 2022, its standard plan was $15.49 a month. By late 2025, it was $17.99. That's a 16 percent increase over three years. Disney Plus went from $7.99 at launch in 2019 to $13.99 — a 75 percent jump. And these aren't one-offs; they're becoming annual rituals. Luna: And it's not just the sticker price. It's the psychological impact. You see the charge hit your bank account every single month. A gallon of milk you buy once a week — that hurts, but a subscription is a constant reminder. Lucas: That's exactly the point. The Bureau of Labor Statistics does track what it calls 'audio and video streaming services' within the CPI. But it's a tiny subcomponent, and it updates slowly. Meanwhile, these companies are testing pricing power in real time. Luna: And they have it. Because churn is surprisingly low. People complain on Twitter, but they don't cancel. Lucas: That's the thing — the subscription model is sticky by design. Once you're in the ecosystem, leaving feels like a loss. So companies keep nudging prices up. And because everyone does it, there's no competitive incentive to hold the line. Luna: So you're saying streaming prices are a leading indicator for inflation psychology? Lucas: I think they're a better gauge of how inflation actually feels than the CPI headline. Look at the 10-year breakeven inflation rate — it's at 2.40 percent. That's basically unchanged from last month. The bond market isn't panicking. But consumers are. Luna: Because the bond market looks at broad aggregates, while consumers look at their monthly bills. And streaming is one of those bills that keeps growing. Lucas: And it's not just entertainment. Think about how many subscriptions the average household now has. A 2025 survey found the average American pays for four streaming services. That's roughly $60 a month. If they all go up $2 a year, that's $96 more annually — invisible in the official numbers, but very visible on a bank statement. Luna: And that's before we talk about the ad tiers. Companies are effectively raising prices by forcing people into ad-supported plans if they want to keep costs down. You're paying with your time now, too. Lucas: Right. Netflix's ad tier launched in late 2022 at $6.99. Now it's $7.99. Disney Plus with ads went from $7.99 to $9.99. So even the 'budget' option is getting more expensive, and you're watching commercials. Luna: It's a two-sided inflation. You pay more, and you get less — or at least, a worse experience. Lucas: Which brings us back to consumer sentiment. When people feel like they're paying more for the same or less, that erodes confidence. And confidence drives spending behavior. If people feel pinched, they pull back on discretionary purchases. That can slow the economy. Luna: But the Fed is watching the PCE price index, not streaming bills. The latest PCE is at 130.3, up from 129.48. That's still above the 2 percent target. Lucas: And the fed funds rate is flat at 3.64 percent. The Fed is in wait and see mode. But if consumer sentiment keeps deteriorating, they might have to act — not because inflation is spiking, but because inflation psychology is broken. Luna: Which is harder to fix. You can lower interest rates, but you can't un-ring the bell of perceived unfairness. Lucas: And that's the real risk. If people start expecting prices to keep rising faster than wages, they'll change their behavior in ways that make inflation self-fulfilling. Luna: So streaming is both a symptom and a cause. It's a symptom of companies' pricing power, and a cause of consumer angst. Lucas: Exactly. And this is where the show comes in. Look, we do these episodes every day — diving into the numbers, connecting the dots. And we're able to do it without ads, without sponsors, because a small group of listeners supports us through buy me a coffee dot com slash fexingo. Luna: Yeah, it's a pretty straightforward model. If you've gotten something out of these conversations, that's the way to keep them going. No pressure, just the option. Lucas: Right. So back to the streaming inflation story — I want to talk about what happens next. Because if consumer sentiment stays this low, companies might start to hit a ceiling on price hikes. Luna: You think we're near peak streaming price? Lucas: Maybe not peak, but we're entering a phase where the trade-off becomes more visible. For example, Netflix lost subscribers in early 2025 after a price hike. They regained them, but it shows there's a limit. The question is whether that limit is higher than where we are now. Luna: Disney Plus had a similar pattern. They raised prices, lost subscribers, then added an ad tier to win them back. So the industry is learning that pricing power isn't infinite. Lucas: But learning slowly. Because on the other side, you have the content arms race. To justify higher prices, you need more content. That means more spending. So it's a cycle. Luna: And that cycle feeds into the broader inflation narrative. If companies are spending more on content, that's more money flowing into the economy — more hiring, more production. That can keep price pressures alive. Lucas: And the Fed is watching that. The 10-year breakeven is a market-based measure of expected inflation. It's at 2.40, which is above the 2 percent target but not alarming. But if streaming and other sticky prices keep rising, that breakeven could creep higher. Luna: So the streaming bill is like a canary in the coal mine for inflation expectations. Lucas: Exactly. And it's one that every listener can check for themselves. Look at your own subscriptions. How many have gone up in the last year? Two years? That's your personal inflation rate, and it might tell you more than the CPI does. Luna: That's a good homework assignment. And maybe a conversation starter at the Memorial Day barbecue. Lucas: Just don't be the person who brings up inflation at the picnic. But if someone does, now you have the streaming angle. Luna: Fair point. And if they want to dive deeper, they know where to find us. Lucas: Yeah. We'll keep doing these episodes as long as people find them useful. The data keeps coming, and we'll keep connecting the dots.