AIM Framework glossary
Price Inflation Ratio
Canonical definition
Price Inflation Ratio is the Crisis State Variable measuring the ratio of the Mimetic Premium (P(M)) in the prices of essential goods, housing, education, healthcare and the other goods an Individual cannot forgo, to the Appetitive and Intrinsic components of the same prices, taken over transactions and aggregated across them, since the Price Decomposition is defined on the purchase and not on the good. In the notation of the Price Shares the Price Inflation Ratio is sM/(1 − sM) over the essential-goods basket. The Price Inflation Ratio reads, in the markets an Individual cannot forgo, the first two factors of the Build-Up Time Decomposition: the Premium each transaction carries, and the share of essential markets that carry a Premium. Premium financed by debt enters the claims whose service limit is the Interest-Only Threshold.
Explanation
The Price Inflation Ratio operationalises the Housing Exception Principle at the level of the entire essential-goods basket. When the ratio is low, most of what people pay for essentials reflects A-function and I-enablement. When the ratio is high, a large fraction of essential-goods prices reflects Mimetic Premium, people are paying for status signals embedded in necessities. The variable is diagnostic because high Price Inflation Ratio simultaneously erodes A-sufficiency (essentials cost more than their functional value), destroys Exit Capacity (you cannot opt out of housing), and increases Concealment Density (the more Premium a price carries, the more elaborate the structure that keeps it from being seen). See Crisis State Variables, Housing Exception Principle, Mimetic Premium.
Epistemic status
Framework-Specific Parameter. Component of Crisis State Architecture.