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Because the government often removes a good that has higher inflation from the basket of goods that it calculates the inflation rate from.
There is also Geometric Adjustment: if a loaf of bread goes up by 5% year-on-year, they cut one-third of the loaf off, so the remaining smaller loaf is cheaper and therefore only went up 3% and the govt says the inflation on bread is 3% when it was actually 5%.
Another reason is annual Social Security cola payments.
Because the government often removes a good that has higher inflation from the basket of goods that it calculates the inflation rate from.
There is also Geometric Adjustment: if a loaf of bread goes up by 5% year-on-year, they cut one-third of the loaf off, so the remaining smaller loaf is cheaper and therefore only went up 3% and the govt says the inflation on bread is 3% when it was actually 5%.
Another reason is annual Social Security cola payments.
And I think your opinion is mistaken. The CPI reflects average inflation rates quite accurately. It doesn't reflect personal inflation rates. If you are buying things that are not in the market basket of goods you may end up having more or less inflation. There is always someone out there claiming the government is deliberately understating the rate of inflation. Its been that way since I was a kid.
Because the government often removes a good that has higher inflation from the basket of goods that it calculates the inflation rate from.
There is also Geometric Adjustment: if a loaf of bread goes up by 5% year-on-year, they cut one-third of the loaf off, so the remaining smaller loaf is cheaper and therefore only went up 3% and the govt says the inflation on bread is 3% when it was actually 5%.
Another reason is annual Social Security cola payments.
Your 100% wrong about this. The BLS does, in fact, adjust for "shrinkflation."
In July, the cost of groceries increased 13.1% compared to last year, according to the Bureau of Labor Statistics' (BLS) July Consumer Price Index (CPI). In addition to tracking prices, the BLS also monitors "shrinkflation"— when the price of a product stays the same (or rises), but its package size gets smaller.
But according to the BLS, shrinkflation is a type of price increase. “That’s something we track and account for," Steve Reed, an economist at the BLS told Yahoo Finance. For example, when looking at the "pricing a 64-ounce [container] of orange juice and we try to price it and it’s only 59 oz; maybe it’s the same price, but for 59 ounces instead of 64 ounces, that’ll be computed as a price increase.”
“The imperial need for control is desperate because it’s so unnatural.
Tyranny requires constant effort. It breaks. It leaks.
Authority is brittle. Oppression is the mask of fear. The day will come when all these skirmishes and battles will have flooded the banks and then there will be one too many. One single thing will break this. Remember that.”
I thought this was the economic forum, not the P&OC forum. In what way is the strengthening dollar "Tyranny" or "Oppression" in economic terms?
The CPI is so wrong, the government selectively pick items that didn't go up as much in price while everything else goes up.
Another problem is that suppliers are capitalizing on this and many retailers are slow at passing on the cost to consumers.
For example, a delivery of goods suddenly went up in fees or price during final delivery. And the retailers cannot just update the prices quickly so they have to absorb the cost increase.
This is what's killing Target right now, they haven't been able to offset supply chain price increases to consumer who can just turn around and buy from amazon or other cheaper places. We should have a separate thread about Target maybe counting down towards massive store closures.
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