Inflation Indicators
Q: We are hearing inflation numbers are low at this point. Everything I buy seems higher than it was a few years ago. Why are the inflation numbers being reported low yet I am spending more not less?
A: There was an interesting article in the Economist on that called "Overcooked, undercooked" What do burger prices tell us about the reliability of official figures? It argues that some governments are fiddling their inflation figures, and the true rate is much higher than officially reported. The best way to measure consumer-price inflation is a hotly contested debate among economists. Why not rely on burgernomics? Like the Big Mac index which measures whether currencies are under or over valued, it can be used to look at inflation. They have compared Big Mac prices over the last 10 years vs reported inflation in a number of countries around the world. There was a discrepency between reported and Big Mac price increases over the last 10 years. CPI is a based on a basket of goods and maybe isn't a good representation of our reality.
A: There was an interesting article in the Economist on that called "Overcooked, undercooked" What do burger prices tell us about the reliability of official figures? It argues that some governments are fiddling their inflation figures, and the true rate is much higher than officially reported. The best way to measure consumer-price inflation is a hotly contested debate among economists. Why not rely on burgernomics? Like the Big Mac index which measures whether currencies are under or over valued, it can be used to look at inflation. They have compared Big Mac prices over the last 10 years vs reported inflation in a number of countries around the world. There was a discrepency between reported and Big Mac price increases over the last 10 years. CPI is a based on a basket of goods and maybe isn't a good representation of our reality.
posted by David Allard at
12:15 PM
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