Forget the CPI, real inflation is 8%

If you drop large ‘one time’ expenses such as home and auto purchases and focus on recurring purchases, such as groceries, gas and basic household goods you get a clearer picture of the true inflation rate.

Via CBS News:

Forget the modest 3.1 percent rise in the Consumer Price Index, the government’s widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.

The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don’t look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans’ typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.

The institute contends that to get a good read on inflation’s “sticker shock” effect, you must look at the cost of goods that the average household buys at least once a month and factor in only the kinds of expenses that are subject to change. That, too, eliminates the cost of housing because when you finance your home with a fixed-rate mortgage, that expense remains constant until you refinance or move.

This data helps explain that sinking feeling you are just not getting ahead.

Further regarding inflation here at MCT:

  • Bunkerville March 2, 2012 at 10:29 am

    No one talks about many companies freezing wages due to the sad state of our economy. True inflation – the cruelest tax of all.

    • steve March 2, 2012 at 10:32 pm

      They don’t because the under employment rate is shockingly high. And the MSM refuses to report anything that reflects poorly on dear leader.

  • Jim at Conservatives on Fire March 2, 2012 at 8:37 pm

    Bunker makes a good point. It would be interesting to this data as percentage of take home pay over time.

    • steve March 2, 2012 at 10:34 pm

      Yep, Bunker always makes good points as do all the approved commenters here at MCT.