5 ms·

1-2 pc every year or lifetime? Even a small difference in the yearly rate will add up to a huge difference over time.

• riffraff 6y ago
  The difference does not need to be always in the same direction.
  • Clewza313 6y ago
    It would be if the thesis is that the CPI is systematically manipulated to suppress inflation.
    • rsj_hn 6y ago
      That would be pretty hard to do in our data rich environment. It's pretty easy to look up historical prices of things like oil, wheat, and other commodities, as well as labor, automobiles, and other consumer goods. Even a small systematic manipulation would become really obvious after a decade or two.
    • totalZero 6y ago
      Not necessarily, if the manipulations are reverted smoothly over time. There are certain moments in which inflation is a focal point (now for example) and other moments where nobody really cares. Also, I think the inclusion of things like tuition and medical care kind of adulterates the data. I have read that people go to the hospital for non-emergency reasons less often than before the pandemic, and also that several schools slashed tuition due to the pandemic. That offsets price increases in other areas.
      • imtringued 6y ago
        The problem with this type of argument is that the fed doesn't want to exceed more than 3% inflation. It has no reason to lie and pretty much every central bank is struggling with lack of inflation. You can criticize the Fed for doing reckless policies that fail to increase inflation and only drive a bubble. Why would you even need an unproven conspiracy theory like CPI when the problems with the Fed are undeniable? You can even complain to the fed that inflation is too low and they should either calm down or do something else since the Fed is clearly not capable of driving inflation. Considering the mission statement of the Fed that's a huge blow by itself.
        • totalZero 6y ago
          I don't think you understand what I am saying. 1. I'm not arguing that the fed is artificially inflating inflation. I'm saying that if they want to suppress the appearance of inflation in the short term so that they can keep rates low and prevent any panic about the dollar until they can react to it, they have some ability to do so because of the opaqueness of the data. 2. Bias in a signal doesn't have to be persistent to be problematic. The average reading does not have to be biased in the long term for there to be a problem with the spot reading. That's a major reason why more granular data is always better. 3. I'm not stating any conspiracy theory. The Fed is driven by data. Biases in data affect data-driven decisions. CPI includes various inputs, not all of which are experiencing the same demand. CPI is an agglomerate reference.
        • eru 6y ago
          Your complaint about the Fed was right in the last decade. But something seems to have changed for the better when they changed to average inflation targeting recently.
• Clewza313 6y ago
  Lifetime: http://www.thebillionpricesproject.com/wp-content/uploads/2017/04/data-priceindices.jpg http://www.thebillionpricesproject.com/wp-content/uploads/20... Squinting at the graph, for 2008=100, in 2016 CPI was ~108 and BPP was ~109. (Couldn't find a newer graph with a quick look.)
  • Retric 6y ago
    +8% vs +9% is a 12% divergence is just 8 years, and the numbers where even further apart in 2014. So, it looks like they are very different models.
    • alexmingoia 6y ago
      The dollar has lost more than 90% of its value in just 50 years. The point is the BPP is proof there is no nefarious conspiracy to manipulate CPI to hide “true” inflation. Amongst the gold-bug hyperinflationist crowd there is a commonly held belief that inflation is much higher than CPI or that CPI is manipulated to hide inflation. The fact that a simple model scraping a few online retailers results in nearly the same annual percentage change demonstrates that this conspiracy theory is a myth.
      • rdtwo 6y ago
        CPI is probably near CPI the problem is that CPI does not actually measure inflation felt by the average American. The basket of goods is not reflective of actual allocation. Because of that the CPI value is significant lower than actual inflation
      • antb123 6y ago
        Essentially inflation is a political measurement that drives policy decisions and that is cause for a lot of concern. The current inflationary model is mostly driven by salaries. Thus in the 70s unions drove up inflation due to oil shocks. The concern for me is that models do not include asset inflation for goods (housing) that most people would like to own and where there is little productivity improvement. Using an equivalent rent model ignores this preference.