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Is inflation tame according to the Fed calculations which ignore expenses that matter to people like oil, or according to meaningful calculations? Because it su
by Astrohacker 15y ago
Is inflation tame according to the Fed calculations which ignore expenses that matter to people like oil, or according to meaningful calculations? Because it sure seems to me that the prices I pay are rising pretty quickly. Quickly enough that I can notice it. A cup of coffee that cost $1.95 a couple of years ago now costs $2.30. And I'm not earning any more money than I was then, so I can feel the difference.
- nerfhammer 15y agoCPI is computed by the Department of Labor. There is both a CPI and a separate "core CPI" index that attempts to exclude energy costs.
- eftpotrm 15y agoIncluding oil in inflation costs distorts the picture though. The standard response to inflation is to suppress demand within the economy to make price rises unsupportable and dampen things down. When the inflation is due to factors that are external to the economy though, such as a global spike in commodity prices, this measure is largely ineffectual; the dampening effect on global market prices is insignificant compared to the dampening effect on the internal economy. You only end up suppressing your own economic growth to your own cost while seeing a small at best effect on inflation in the commodity that was causing the inflation for which you're trying to control. Oil prices are rising for perfectly sensible global reasons, get used to it. This is causing inflation you can't control and which the economy can't afford to compensate for; your standard of living will drop. If you want to avoid this, work harder to earn more; it's the only way out.