8537
VIP Member
And totally inaccurate.
How did you arrive at the conclusion that it's "totally inaccurate"? What part of the methodology do you find lacking?
Over the years, the methodology used to calculate the CPI has also undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate.
Indeed, a natural substitution effect causes the CPI to overestimate the value of the basket of goods.
The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI focus as a purposeful manipulation that allows the U.S. government to report a lower CPI.
So tell me, NOLA - Would you prefer a steady basket of goods so that we're still weighting home phone service at the same basis we did in 1991? Or did you just find the first link you could when googling "CPI"?
If the BLS reports inflation at 3%, you can bet it is probably closer to 10%.
No. Even those that believe they undercompensate for technology and substitution agree that the impact is relatively small - an amount equal to a point or two at the absolute most.
But congrats - you had an uneducated bias and you found a link to confirm it!