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Yes that’s how it should work, but that’s not how it works in reality. The obvious problem is that the wages haven’t gone up meaningfully. However, a bigger pro

Yes that’s how it should work, but that’s not how it works in reality. The obvious problem is that the wages haven’t gone up meaningfully. However, a bigger problem is that the “inflation” does not reflect the reality. For 20 years since 2000, the inflation has on an average been around 2%, a few times peaking at 3%. However if you look at some of the biggest expenses a household has: housing, healthcare, education etc., the inflation has been a lot higher.

gruez 4y ago
>However if you look at some of the biggest expenses a household has: housing, healthcare, education etc., the inflation has been a lot higher. Inflation (ie. the headline number you see) is already weighted to account for this. Claiming that inflation "does not reflect the reality" because a few of the basket items are growing in price faster than the weighted average doesn't really make much sense. You'd expect 50% of the items (by weight) to be growing faster than the index by definition. Also, even though housing grew faster than inflation, it's not by much[1] [1] https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1024.png?x91208 https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1...