Just for the record, I disagree with this. I believe that, although the CPI is not perfect, it’s pretty close to reality compared to what others say. It would take a very, very long post to fully justify my position, and unfortunately I don’t have the time and energy to write it, so I’ll just mention the most relevant points:
– inflation is not the same everywhere; in San Diego, the local CPI has probably been substantially higher than the national CPI for a very long time. Think Europe: a few years back Ireland was at 7% inflation, while Germany was at 1%, both with same currency. I’m sure the Irish felt their inflation rate was higher than the 3% average reported by the ECB. That doesn’t mean the ECB was lying.
– most people don’t fully grasp what the CPI measures; it measures changes in the price of the SAME goods or services. The best example is health insurance. Most critics say “health insurance is going up 10%/year, how is that not inflation?”. Well, it is not. It is going up 10%/year because we “consume more health care” than we used to. The price of a single medical procedure doesn’t go up 10%/year. It maybe goes up 3%/year, but we get 7% more of them done. And that will continue, as the population gets older.
These, IMHO, are the main misconceptions. People assume that inflation is the same everywhere (which is not), and that all increased expenses are due to inflation, which is again not true. We simply consume more of everything than we used to (bigger cars, houses, etc), and that is reflected in the prices we pay.
PS: the majority here will probably disagree with my position. That’s fine. I mostly wrote this to raise awareness to the opposing point of view, not to win converts.
