The "basket" they use for CPI calculation is a genuinely difficult problem, since what people buy changes over time. Electronics is a great illustration - if I included 40" televisions last year, should I compare the price of this year's 40" television to last year's, or should I compare the price of this year's 50" television to last year's 40" because that's what people are buying? Both ways are right and both ways are wrong, depending on what you want the number to mean.
But even allowing for these difficulties, I still think the government keeps changing how inflation is calculated in an effort to make itself look better.
When real estate increases dramatically they measure rents, which are (in a hot real estate market) subsidized by people trying to cash in on capital appreciation. In a declining real estate market with rising rents they switch to "rent equivalents" based in some part on the cost of real estate.
You can hide pretty big increases by switching what you measure mid-stream, particularly if you just graph the YoY official inflation rate (including changes) without going back and recalculating every year using the same methodology.
And then there's the reporting. The number you hear on the news may or may not include "the volatile food and energy sectors" depending on which is lower.
There's a reason it seems prices are rising faster than the CPI reported on your drive home. They are rising faster.
But even allowing for these difficulties, I still think the government keeps changing how inflation is calculated in an effort to make itself look better.
When real estate increases dramatically they measure rents, which are (in a hot real estate market) subsidized by people trying to cash in on capital appreciation. In a declining real estate market with rising rents they switch to "rent equivalents" based in some part on the cost of real estate.
You can hide pretty big increases by switching what you measure mid-stream, particularly if you just graph the YoY official inflation rate (including changes) without going back and recalculating every year using the same methodology.
And then there's the reporting. The number you hear on the news may or may not include "the volatile food and energy sectors" depending on which is lower.
There's a reason it seems prices are rising faster than the CPI reported on your drive home. They are rising faster.