The way some inflation metrics are calculated, you’d think we could do without essentials such as food, shelter, or gas. This facetious question highlights a serious issue: the limitations of current inflation data.
The Problem with Our Measuring Stick.
Inflation data is perplexing at best, considering it excludes a whopping 55% of the index it purports to represent. There’s a tongue-in-cheek saying: “Take out all the costs that are rising, and you’ve got zero inflation.” Surprisingly, even Nobel Laureates have entertained this oversimplified view.
Since January 2021, average prices have increased by 17.1%, with essential consumer goods seeing even steeper hikes. The impact on energy prices is particularly severe, ranging from a 23% to 77% increase, hitting consumers hard.
Measuring What Matters
This selective data skews our economic understanding and calls for a rethink in both financial metrics and honesty.