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When people say that inflation is not being properly measured, what they're likely referring to is the fact that some policy makers use the CPI Less Food and En

by astine 13y ago

When people say that inflation is not being properly measured, what they're likely referring to is the fact that some policy makers use the CPI Less Food and Energy which means that some of the biggest expenses for the majority of people, food and energy, are sometimes ignored when discussing the effects inflation.

icambron 13y ago
That's not a measurement problem, though; that's a what-should-our-policy-response-be problem. Food and energy prices are actually easier to measure and compare year-over-year. There are good arguments for (and some against) excluding them from your monetary policy targets, but I've never heard of anyone doing it when discussing human wellbeing. But either way, it's still being measured. The World Bank has inflation for middle income countries as 4.1% [1]. If you download their data sheet, you'll see that number is a GDP deflator, so no food/energy exclusion. That's not an ideal number, but it's not high either, and it's much lower than most previous years. They also have a CPI number, which is actually higher: 4.6%, but again not terrible. So my question still stands: does the GP think that number is wrong, and if so, why? [1] http://www.worldbank.org/en/country/mic http://www.worldbank.org/en/country/mic
onebaddude 13y ago
>the fact that some policy makers use the CPI Less Food and Energy which means that some of the biggest expenses for the majority of people, food and energy, are sometimes ignored when discussing the effects inflation. That's hardly a "fact". It's nonsense that circulates around the internet. Look at the CPI reports yourself. Both figures are reported and public information, core and headline CPI, with the latter including the volatile food and fuel prices. In fact, you can look at the data and see precisely how much housing and fuel prices have risen or fallen, month to month.

by astine 13y ago

icambron 13y ago

That's not a measurement problem, though; that's a what-should-our-policy-response-be problem. Food and energy prices are actually easier to measure and compare year-over-year. There are good arguments for (and some against) excluding them from your monetary policy targets, but I've never heard of anyone doing it when discussing human wellbeing. But either way, it's still being measured. The World Bank has inflation for middle income countries as 4.1% [1]. If you download their data sheet, you'll see that number is a GDP deflator, so no food/energy exclusion. That's not an ideal number, but it's not high either, and it's much lower than most previous years. They also have a CPI number, which is actually higher: 4.6%, but again not terrible. So my question still stands: does the GP think that number is wrong, and if so, why? [1] http://www.worldbank.org/en/country/mic http://www.worldbank.org/en/country/mic

onebaddude 13y ago

>the fact that some policy makers use the CPI Less Food and Energy which means that some of the biggest expenses for the majority of people, food and energy, are sometimes ignored when discussing the effects inflation. That's hardly a "fact". It's nonsense that circulates around the internet. Look at the CPI reports yourself. Both figures are reported and public information, core and headline CPI, with the latter including the volatile food and fuel prices. In fact, you can look at the data and see precisely how much housing and fuel prices have risen or fallen, month to month.