Is Inflation Measured Wrong?

Why some analysts believe the Consumer Price Index formula understates inflation while others believe the CPI formula overstates inflation. What really matters to us individually when it comes to inflation. Topics covered in this episode include:What is inflation and what causes it.How is the Consumer Price Index calculated and how has the CPI formula changed over time.What are examples of different CPI measures.Why do some analysts believe U.S. inflation is higher than what CPI states while others believe inflation is lower than what the Consumer Price Index shows.How inflation calculations impact the measurement of other economic data such as the rate of poverty and the growth in real wages.What are consumer attitudes toward inflation and why do central banks worry about changes in household and business inflation expectations.How individuals can monitor and improve their cost of living. Thanks to Sleep Number and Money For the Rest of Us Plus for sponsoring the episode. For show notes and more information on this episode click here.[0:18] Traditional methods of measuring inflation.[4:00] The CPI has changed from a fixed-basket approach to a consumer-representative approach.[6:39] The controversy concerning the accuracy of CPI measurement.[9:11] Is inflation overstated because of how the CPI-U is calculated?[11:23] Rwanda case study: the connection between inflation and poverty.[15:17] Why governments care so greatly about the public’s view of inflation.[17:31] How inflation expectations are measured.[18:52] How do we calculate the desired standard of living?[20:41] The CPI isn’t an accurate depiction of the standard of living.[24:20] Are you satisfied with how you spend your money?