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That's the elephant in the room with inflation measures (CPI CPIH RPI) the selection of the basket of goods can have a massive effect on the actual recorded ra
by Mauricebranagh 6y ago
That's the elephant in the room with inflation measures (CPI CPIH RPI) the selection of the basket of goods can have a massive effect on the actual recorded rate - which may not be what the average person on the ground experiences.
Governments have incentives to use this to flatter the results or change inflation measures eg the UK and its switch to CPI from RPI for a lot of things.
- zelos 6y agoPresumably there's a big difference in the level of inflation experienced based on income level as well: someone just scraping by is going to be much more exposed to food and rent inflation than a developer on $100k.
- foolmeonce 6y agoTrue, but the chosen measure is going to be the lowest inflation imaginable since it relates strongly the global price of goods instead of services cost. Poor people actually can't escape service costs and pay for a lot more (seemingly) mandatory service costs that go away when you have enough money to stay away from them. I.e. the costs of not having a fridge at all vs being able to bulk shop at a warehouse are all massively higher.
- tomatocracy 6y agoIn addition there's another complication - the BLS also makes (downward) adjustments for improvements in product quality over time to reflect that they have more value.