Can someone explain this to the dumbjock I really am.
CPI:Inflation Meter:Length
CPI doesn’t incorporate changes in food or energy prices. There are other differences between CPI and “true” inflation measures, but that’s a big one…
So CPI is a number. Inflation is the increase in that number.
buyicide Wrote: ------------------------------------------------------- > CPI doesn’t incorporate changes in food or energy > prices. There are other differences between CPI > and “true” inflation measures, but that’s a big > one… “Core” CPI excludes food and energy. So-called “Headline” CPI does. CPI is very simple - “Consumer Price Index”. It’s one measure of inflation in consumer prices. If you dig into the CPI calculation methodology, you will see there are real reasons a person could think CPI is not the best measure of inflation. Start with “Hedonics”. However, I don’t buy the “Government is suppressing CPI” argument. The Government has tons of contracts tied to CPI, both on the expense and revenue side, and has no real horse in the race, except perhaps to keep the masses calm.
The main reason CPI has been doing funny things lately is that the cost of housing part of the calculation has been dropping. IIRC, they compute a kind of rent-equivalent, based on housing prices, so as housing prices crater, CPI goes down, even if people’s mortgage costs haven’t gone down and rents aren’t down as much as housing prices were. Meanwhile, the cost of food and many other things has been going up, and fuel is bouncing around all over the place. However, the housing component is a pretty large portion of the CPI “basket,” since for many consumers it is their biggest single expense.
buyicide Wrote: ------------------------------------------------------- > CPI doesn’t incorporate changes in food or energy > prices. There are other differences between CPI > and “true” inflation measures, but that’s a big > one… CPI has two main measurements, core and total. Both are released, one has food/energy, the other does not. Please don’t spread FUD. There aren’t any “true” measures of inflation, as no measurement is perfect and all have flaws. Some are better measuring certain parts of inflation than others (such as PPI vs CPI). Hedonics, as mentioned before, are a difference added into the official CPI numbers (core or headline) and are controversial. However, they are rational, as are many other adjustments made to CPI. Many claim that other alternative measures are the “true” measures (shadowstats is one such website), but shadowstats never really explains why they think what they do, or, if they do, the reasoning is quite flawed. Many differences in their measurements cannot be explained easily.