CPI Inflation Criticism

Thanks for checking!Btw, many economist argue that CPI overstates inflation. Mostly because CPI has a relatively fixed basked, but people adjust what they are buying if relative prices shift. (Eg if bread becomes relatively more expensive than pasta, people buy less bread and more pasta. The CPI basket does not reflect that.)A modern alternative is to use the GDP deflator. https://en.wikip

Your not taking about an inflation index thec, but a cost of living index. And they are not the same thing. There are many reasons the cost of living can change without a change in the currency, such as a change in the preference of goods or technological advancement in a particular field or price controls or regulation.If you are going say "but the CPI does measure things that way" you are right. It has been well observed that the CPI had been looking more and more like a cost of l

I think that’s a reasonable request. Inflation rose at a 7.9% annualized rate in February. However, I’ve always been bothered by the official inflation numbers as they use a single gameable metric (CPI) to describe a complex phenomenon.The Consumer Price Index (CPI) uses a single number to explain a general rise in prices that affects different consumer segments very differently. For example, it uses a methodology that basically excludes house prices by instead measuring owner equivalent rent

Because true inflation isn’t CPI!

This is by design. CPI is meant to hand wave inflation away. Stocks, houses and hundred other things fly to the moon but there's no inflation according to CPI (almost none).

CPI is also a measure that is altered over time by groups with a vested interest in keeping “inflation” low.As a very simple example of why this may be misleading, consider that house prices are not considered in the “basket of goods” that Americans buy, despite this being literally the most expensive purchase most people ever make.The formula itself is also changed from time to time. If we were using the “old” formula, inflation would be MUCH higher (shadowstats.com for current numbers).

In the US BLS headline CPI is used, I think.>all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.You can critique inflation measures, but there is good critique and bad critique.Including some items can introduce unnecessary noise or make the measurement less accurate over long term. Some prices can be safely left out from the price basket because their prices are know to get into the index indirectly.In US CPI used to overestimate i

When people say that CPI doesn't show true inflation, what measure do they prefer to use instead?

The CPI is not calculated honestly. If you use the CPI tabulation from the 1970s inflation will be way higher than what the current govt statistics from BLS state. For example, Owner’s Equivalent Rent is used, not actual rent that many families are struggling to pay. In addition, the Fed’s core inflation number is ex food and energy prices, which is also misleading.

The "free press" is reporting BLS data. And BLS produces a CPI number based on a formula to act as an indicator, not an absolute measure. People tend to react to things they buy frequently which also happen to be the most volatile (food and fuel) and react less to things they actually spend most of their money on (shelter and transportation). CPI is a broad indicator and will never match the lived experiences of 350M individuals. Inflation can vary widely across a lot of dimensions inc