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Like most government-provided numbers, the Consumer Price Index (CPI), the primary quoted gauge of inflation, is a total farce. Take a look at the rate they’ve given us since Covid:

In other words, according to your government, the cumulated increase in prices since 2020 is about 25 percent. Thus, if your average expenses in 2020 were $1000, they’re now about $1250. Is this even remotely connected to your reality?!!! The CPI was created to maintain the change in prices of a representative basket of goods in the economy. The problem is the government tweaks that basket every year. There are three moving pieces–what’s in the basket, how heavily each thing is weighted, and how price changes are adjusted for changes in the products themselves. So, if chocolate or coffee or beef skyrocket in price, they simply change the weighting. Technological improvements in computers, etc. are used to reduce the overall CPI number. For example, since processors, memory, and storage improve every year, a seller would have to heavily discount a 2020-era computer to move it. A 2026 computer costs the same or more as a computer in 2020, but all the components are better; therefore, it’s no longer an apples-to-apples comparison. Government officials use interpretation wiggle room to lower the overall number as much as they can.

Even if the numbers were honest and comparable (which of course they’re not), there are two problems:

1) The quoted inflation is a rate of growth. Thus, if prices went from $100 to $200, then $200 to $250, inflation would be said to be “slowing” or “cooling” since the rate of increase dropped from 100% to 25%. Feel better?

2) The CPI is an overall average, so when times are tough, people simply redirect their spending to essentials; they can no longer afford as much of the luxury discretionary spending. Therefore, prices of those items drop.  In other words, outrageous increases in food, gas, housing, and transportation are offset by price breaks in the items we can no longer afford to buy.

To make the numbers seem even better, you often hear “core CPI” quoted. This is CPI with food and energy items removed. Who needs those items anyway, right?!

It doesn’t matter though if you understand all this gooblygook. Anyone who’s done their own shopping the past few years know that prices are out of control. Don’t let any politicians or media personalities gaslight you into denying what you’ve seen with your own eyes. And never, NEVER trust a government-compiled statistic again!

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