![]() Importantly, the public usually has not been aware of or understood these changes. Specifically, changes made to the definition of the CPI and related methodology in recent decades have reflected theoretical constructs offered by academia that have little relevance to the real-world use of the CPI by the general public. The growing difference in perception versus reality primarily is due to changes made over decades as to how the CPI is calculated and defined by the government. Anecdotal evidence and occasional surveys have indicated that the general public believes inflation is running well above official reporting, and that public perceptions tend to mirror the inflation experience that once was reflected in the government’s formal CPI reporting. In the last 30 years, a growing gap has been obvious between government reporting of inflation, as measured by the consumer price index (CPI), and the perceptions of actual inflation held by the general public. Real-World Experience and Public Perceptions versus Academic Theories and Political Gimmicks Most of the prior Comment has been repeated, including some material from the September 2008 Response to BLS Article on CPI Misperceptions. While the following text includes new material, the concepts all have been explored in earlier writings. government’s statistical agencies and the rationale and approach used by in compiling the ShadowStats Alternate Consumer Inflation measures. 438-Public Comment on Inflation of May 15, 2012, reviewing the nature of inflation understatement by the U.S. Understated inflation used in estimating inflation-adjusted growth has created the illusion of recovery in reported GDP.Use of the CPI to adjust retirement benefits, private income or to set investment goals impairs the ability of retirees, income earners and investors to stay ahead of inflation.Politicians look to expand further the concept of artificially-suppressed cost-of-living adjustments in current budget-deficit negotiations, through the use of the Chained-CPI (see Special C-CPI Supplement at end of this document).With the misused cover of academic theory, politicians forced significant underreporting of official inflation, so as to cut annual cost-of-living adjustments to Social Security, etc.CPI no longer measures full inflation for out-of-pocket expenditures.CPI no longer measures the cost of maintaining a constant standard of living.So As to Understate Inflation versus Common Experience 515-PUBLIC COMMENT ON INFLATION MEASUREMENTĬlick Here for Link to: SPECIAL SUPPLEMENT-CHAINED-CPIĬonsumer Price Index Has Been Reconfigured Since Early-1980s Note: This is an updated version of an article originally published on May 15th, 2012.
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