Edit: thanks to everyone especially those of you that have really detailed answers. I’ve learned a lot .
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Inflation is an average of a basket of goods. Take a look at the BLS website for more information on how they calculate it and why they do it the way they do. It does a lot to dispel the massive amounts of “common reddit knowledge” which is downright wrong. Like the CPS not factoring in housing or education costs (hint, it does). https://www.bls.gov/cpi/
Since the CPI is an average, it means that it will never fully take into account your specific situation. The inflation you experience in your town and for the goods and services you personally buy WILL differ from the CPI numbers. They try and apply a single set of weights to each of the categories and they will differ from your life. For example, some people don’t own a car. As a result, car prices would have little impact on their personal experience with inflation. Especially compared to someone looking to buy a car right now who are likely to feel the car inflation much more than others.
It also accounts for shrinkflation since it looks at what people buy on average across the country. Shrinkflation just means that people will buy more of a given item to get the same amount. Or they just consume less, which can impact the weighting given to each of the categories. Once again take a look at the BLS CPI website as they go into detail about how they calculate the weights. All of the information is published on the site. You REALLY should take a look at it as it is better than reading random redditor opinions, especially since more than a few of those on reddit literally have no idea what they’re talking about.
Something to also understand is that the CPI weights are constantly adjusted in order to reflect how people spend. For example, no one really buys whale oil anymore but that used to be part of the CPI calculation. The pandemic screwed that calculation up in the pandemic era because the weights were not adjusted (at the start) for the fact that nearly everyone stopped spending on things like travel and going out and instead switched to buying things on Amazon. As a result, CPI numbers in 2020 and part of 2021 were most likely horrendously underestimated. Which makes today’s CPI numbers look much worse than they were. Not to say that inflation isn’t a problem, there’s a lot going on in the world that’s screwing with it and short/medium term prospects are not great (thanks Putin and Xi!). But it’s a complex topic and no one has all the answers. Inflation is just one data point in the wider picture, and it makes no sense to focus on it without also trying to understand and fix the source of the inflation. FYI, US government spending doesn’t drive inflation that is being seen globally, of which the US isn’t even that bad compared to other countries including developed economies. Inflation is skyrocketing globally largely because of fuel prices (Thanks Putin!) particularly in Europe and supply chain issues exasperated by literally sealing the entire populations of megacities like Shanghai in their homes for weeks on end (Thanks Xi!). And then Putin’s war cutting off 2 of the largest food and fertilizer exporters globally (Ukraine and Russia are major food baskets in the world). All of these drastically cut supply in the global economy and market economics demand that prices rise as a result. And since it’s a global market… We all feel it.
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