I’m an econ college student, and I just can’t wrap my head around it. An inflation index should be exponential, and it looks like it is until 1980, then it just…planes off. In order for a linear CPI to make sense, inflation would have to be constantly decreasing and that just doesn’t make any sense to the experience of the average consumer.
Edit: here’s the series in question.
https://fred.stlouisfed.org/series/CPIAUCSL
In: Economics
the “market basket of goods” used to define the CPI isn’t what you think it is.
The components that go into it, and the relative weights used in it, are changed all the time to reflect the Fed’s intent. Using it as a true unbiased measure of inflation isn’t ideal.
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