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CPI is based on a basket of goods designated by the Bureau of Labor Statistics. Every month they check the items in that market basket and compare it with the month before. That is how inflation rates are computed. The goods you buy may not be in that market basket. In which case it will not accurately reflect prices.
Inflation is upsetting to people who are not winning pay increases. It often provokes very emotional reactions. Many people notice price increases, but don't notice it when prices drop. For example, gasoline has dropped in price here about twenty to thirty cents a gallon in the last month. Yet, no one talks about that. Rent has gone up here, but that was last year. This year there has been virtually no upward increase. What people are really angry about is that they seem to believe that rents should be rolled back when that seldom happens in the real world. Some food items here have gone down quite a bit. I can buy a gallon of milk for a price between $2.00 and $2.50 a gallon. Walmart prices here for food items strike me as being just slightly higher than they were last year.
I think the 3.7% increase is fairly accurate for the things I buy.
The problem with the "Basket of goods" theory is that the Government picks and chooses what's in the basket. If something in the basket doesn't fit there narrative at that moment in time then that item gets tossed out.
Just for laughs, I used these lists and edited them to make a cpi more relevant to my situation, which is retired with paid off house in a relatively low tax area, and paid off cars, and no debts with a stable company group health plan, etc. It was a bit lower than the national average, but not much. I closely track my spending with Quicken, and that seemed to track both numbers as well.
There are short- term complications to making your own numbers. For example, During Covid lockdowning, we ate in restaurants less but got takeouts, so that spending went down a good bit because now I'm making martinis at home, which is a huge saving. We caught covid twice and that cut down expenses a lot because we did nothing during those weeks.
The problem with the "Basket of goods" theory is that the Government picks and chooses what's in the basket. If something in the basket doesn't fit there narrative at that moment in time then that item gets tossed out.
I'd love to see your examples of this process. If you have any.
I'd love to see your examples of this process. If you have any.
People like to criticize but not to come up with examples to support WHY they are criticizing. I mean, anyone who wants to can read exactly what goes into the CPI measures and how they are calculated. It changes every once in a while (maybe every few years) but only to take into account subtle changes in consumer behavior over time. But nobody wants to hear anything that doesn't support their internal narrative.
For the record, I believe the CPI inflation YOY is pretty close. Some things (like gas, some food, personal items, utilities, and rent where I live, have gone down), while others, such as insurance and property taxes, have gone up. Overall my expenses went up slightly, and mostly it was a big jump in my property taxes and slight increases in insurance, gym fees, and cost of some foods (mostly cost of eating out, which was a choice on my part).
What is up with all the government toadies in this thread? CPI has consistently been "dumbed down" over the years, and now with all of lying coming out of the Biden administration as well as the massive revisions that come out every month on any economic statistics that come out from this administration, there is absolutely no way that CPI measures the same thing that it used to measure 10 or 20 years ago..
I have a question, for anyone other than EDS_ here; whom yesterday stated(different thread)the below link indicates for "most of this year wages have outpaced inflation". https://www.statista.com/statistics/...-inflation-us/
Am I missing something?, or is this poster correct. As this chart seems to indicate, while inflation has cooled; so have wages.
Real wages (adjusted for inflation) for full-time U.S. workers were virtually unchanged from the 1990s to 2015. Since 2015 they have outpaced CPI inflation by a whopping 9%. Over eight years that's 1% a year...wooohoo! The workin' Man is finally catching a break!
All of this assumes we believe the CPI is a relevant measure of real-world inflation.
Real wages (adjusted for inflation) for full-time U.S. workers were virtually unchanged from the 1990s to 2015. Since 2015 they have outpaced CPI inflation by a whopping 9%. Over eight years that's 1% a year...wooohoo! The workin' Man is finally catching a break!
All of this assumes we believe the CPI is a relevant measure of real-world inflation.
why should any job be worth more other then inflation adjustments.
It shouldn’t ..
we make more money by moving up the ladder , earning more marketable skills and taking on more responsibility.
some jobs are even worth less .
a good phone receptionist was priceless to a company at one time
today most companies don’t even have one and anyone who does grab a phone to answer does so as part of other job functions usually
What is up with all the government toadies in this thread? CPI has consistently been "dumbed down" over the years, and now with all of lying coming out of the Biden administration as well as the massive revisions that come out every month on any economic statistics that come out from this administration, there is absolutely no way that CPI measures the same thing that it used to measure 10 or 20 years ago..
I'd like you to explain exactly how the CPI has been "dumbed down" over the years.
Plus, I've never worked for the government, so I am hardly a "government toadie".
I seldom hear a real argument against using CPI. A real argument would be taking some of the goods from the market basket of goods used to compute it and arguing they aren't representative of what the average consumer uses. I don't regard it as a "real argument" just to say something like: Everyone knows that the CPI is just made up.
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