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I've seen people claiming that in several answers.

Please see the latest Consumer Price Index Summary inflation report from the Bureau of Labor Statistics

Here's the link http://www.bls.gov/news.release/cpi.nr0.htm

Please note those items are clearly included and counted.

2007-11-27 10:08:04 · 6 answers · asked by Uncle Pennybags 7 in Politics & Government Government

6 answers

The issue is that the weights may not accurately reflect the percentage of a consumer's budget that is spent on those items. According to the chart at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiri2006.txt , gasoline is about 5% of the consumer's budget and food is 15%. In my budget, its more like 10% and 25%

Now... if I made twice as much money without changing my eating and driving habits at all, that would put my budget in line with the CPI weights. Of course, we know those products have elastic demand and could assume that increased income would lead to increased consumption...(I would definitely buy more steak and take more trips if I got a raise, etc)

Or look at clothing - it gets almost the same weight as automotive fuel. I know I have to fill up my gas tank every week, but I only spend money on clothes when its an absolute necessity. Clothing isn't a necessity like fuel oil, I mean, you can wear last season's shoes but you can't drive to work on last month's tank of gas.

I know people repeat the myth that energy, food, and housing aren't included in CPI (and I'm probably guilty of over-simplifying it like that too) but since you're calling it out I will clarify that its the relative value of the weights that should be disputed/debated.

2007-11-27 10:32:51 · answer #1 · answered by freedom first 5 · 0 0

When you read Yahoo Answers, you will get the opportunity to read comments from the UK. (You're reading one now). The Consumer Price Index in the UK, the basis for UK government inflation figures, applies incorrect weighting to key factors influencing inflation for the ordinary citizen.

For example "The breakdown of the official "basket" of goods in the inflation measure shows what we, in the UK, spend on gas bills is up by 17pc and our spending on electricity is up by 7pc since 2003. But, the ONS's (Office of National Statistics) own numbers show the cost of these bills has risen by 64pc and 45pc respectively in the same period." source: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/16/cncpi16.xml

A similar situation exists with rapid housing inflation not being accurately represented. A lower official inflation rate probably would suit the government if ever, for the first time in UK history, it wanted to try to mislead the UK public. It would also suit employers when it comes to negotiating pay rises in line with the official inflation rate.

I can't comment on the position in the USA, but its probably us Brits confusing you.

2007-11-27 18:51:57 · answer #2 · answered by Baz Cymraeg 3 · 0 0

it will take me some time to study this

thanx for the link

2007-11-27 18:14:04 · answer #3 · answered by Anonymous · 1 0

They're in denial

2007-11-27 18:11:17 · answer #4 · answered by peaches6 7 · 1 0

people beleive what they want to ,and the converse is true.

2007-11-27 21:27:55 · answer #5 · answered by joe c 6 · 0 0

Well I didn't believe that anyway, but I'm sure your wisdom & knowledge is very welcome to other oiks like me. Please continue to enlighten us...

2007-11-27 18:14:26 · answer #6 · answered by Anonymous · 0 0

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