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There are several known flaws in CPI calculation like this, but not all of the ones being touted in this discussion: First of all CPI only tracks basic commodi
by simonh 5y ago
There are several known flaws in CPI calculation like this, but not all of the ones being touted in this discussion:
First of all CPI only tracks basic commodity goods like bread, milk, coffee, etc as a proxy for the basic cost of living. It doesn't track complex or premium products like frozen burritos.
It tracks the quantity of these products people actually buy and their cost per quantity, so reductions in the size of chocolate bars or amount of cereal in packets will not fool the CPI.
It does not take into account the quality of these products. If people start buying less premium coffee and more store brand coffee, or if manufacturers start putting less cocoa and more fat in chocolate this will not show up in the CPI.
The CPI is just one statistic, and should be considered alongside other measures such as consumer buying power and cost of living calculations.
- amrcnimgrnt 5y agoThank you for your comment. I have a follow up question, if you don't mind. I'm not an expert, so is my comment mostly correct? I only brought up CPI to illustrate an example of a widely purchased thing not being included in that particular metric. The rest of the comment, I think, was agnostic to the particular metric used. The point being that what the economic situation an individual or family faces is far more complex than any one metric and the people of a country can become less well off than the metrics reflect.
- def_true_false 5y agoIf it compares things that are not comparable, it's worse than nothing though. I'm pretty sure, for example, that what's considered normal bread in the US or the UK is completely different from continental Europe. Not a difference in quality, it's literally a different product. Same with yogurt, etc.