The CPI Is Underrepresenting Food Inflation By 40%: Here's The Proof

[Zippyjuan]

I do think it highlights the current weakness with the CPI though. A lot of modern economics is aggregation of large data sets and condensing it into one refined point that is applied to everyone. It's the average consumer, the average purchasing of an average basket of goods.

So while what you bring up does have some merit, the averaging of everything among these stats does hide some problems. As an example, if all food more than doubled in price, it'd have a horrific impact on a lot of low and middle income individuals, but in the CPI, it'd still only end up being a moderate increase in inflation.

The Keynesian tendancy to aggregate everything leaves a lot of blind spots and only captures the world, at a glance. I can understand why they do it, and to some degree it is necessary, but constantly combing over things with a broad comb is going to give an inaccurate picture.

How would you calculate it?

As an example, if all food more than doubled in price, it'd have a horrific impact on a lot of low and middle income individuals, but in the CPI, it'd still only end up being a moderate increase in inflation.

The "average family" spends about eleven percent of their income on food. If the index is 100, and the price of food doubles, the index increases by eleven which yes, would indicate an eleven percent increase in the CPI, not 100%. To get 100% increase in the CPI, you need all prices to increase by an average 100% including food, housing, transportation, clothes, etc.

 

[Working Poor]

Supply and demand. Too many people want to live there due to weather and high paying jobs. Homes don't sell or rent for high prices unless somebody is willing and able to pay that price.

I have a relative that used to live in LA in a modest home that they paid $5,000 for brand new in the 50's and later sold for $500,000 they moved to another state and bought a really nice home for $100,000 in a small town and live very comfortably on their retirement and their savings. They had wanted to leave LA for a very long time I am glad they got out and made good for them selves.

 

[nikcers]

I have a relative that used to live in LA in a modest home that they paid $5,000 for brand new in the 50's and later sold for $500,000 they moved to another state and bought a really nice home for $100,000 in a small town and live very comfortably on their retirement and their savings. They had wanted to leave LA for a very long time I am glad they got out and made good for them selves.

Yeah but somehow the banks can control the price of money, sell the biggest amount of realestate back to investors after the housing market collapse for pennies on the dollar, but rents are due to supply and demand.

 

[Fox McCloud]

How would you calculate it?

Well, I'd break it down to be more granular, and make an attempt to calculate the actual money floating around in circulation and what goods it's actually chasing. In this way, you could better track if inflation is actually having an impact versus just sitting in the bank and, if it is having an impact, where are consumers putting most of those dollars towards?

The "average family" spends about eleven percent of their income on food. If the index is 100, and the price of food doubles, the index increases by eleven which yes, would indicate an eleven percent increase in the CPI, not 100%. To get 100% increase in the CPI, you need all prices to increase by an average 100% including food, housing, transportation, clothes, etc.

...Thank you for restating what I already did.