I’ve been looking for a reasonable explanation for this for a while and literally cannot find one. SO help me understand, please. ❤️🤷♀️
In: 42
Who says we do?
Often it’s measured with CPI, which measures the price of a pre-set collection of goods and services, representing what an average individual may spend on.
Who says we do?
Often it’s measured with CPI, which measures the price of a pre-set collection of goods and services, representing what an average individual may spend on.
Who says we do?
Often it’s measured with CPI, which measures the price of a pre-set collection of goods and services, representing what an average individual may spend on.
Here is a longish article that explains your question and why certain items are sometimes removed. Basically there are some items that are more volatile and can mask other issues. In many cases, supplementary data is also available that tracks the excluded items and this gives economists a better idea of what are the underlying trends and account for the more price volatile items later.
[https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328](https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328)
In regards to real estate, it’s because the average person stays in a home they purchased somewhere around 10 years before buying another and moving. Although the value of a person’s house obviously affects their bottom line, people can easily live through an inflation increase and decrease cycle without ever having to deal with the real estate market. Locked in interest rates can easily avoid the cycle as well. Stuff like the prices of groceries, gas etc are felt by everyone constantly and are a better measure of what people are dealing with in regards to inflation.
Here is a longish article that explains your question and why certain items are sometimes removed. Basically there are some items that are more volatile and can mask other issues. In many cases, supplementary data is also available that tracks the excluded items and this gives economists a better idea of what are the underlying trends and account for the more price volatile items later.
[https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328](https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328)
In regards to real estate, it’s because the average person stays in a home they purchased somewhere around 10 years before buying another and moving. Although the value of a person’s house obviously affects their bottom line, people can easily live through an inflation increase and decrease cycle without ever having to deal with the real estate market. Locked in interest rates can easily avoid the cycle as well. Stuff like the prices of groceries, gas etc are felt by everyone constantly and are a better measure of what people are dealing with in regards to inflation.
In regards to real estate, it’s because the average person stays in a home they purchased somewhere around 10 years before buying another and moving. Although the value of a person’s house obviously affects their bottom line, people can easily live through an inflation increase and decrease cycle without ever having to deal with the real estate market. Locked in interest rates can easily avoid the cycle as well. Stuff like the prices of groceries, gas etc are felt by everyone constantly and are a better measure of what people are dealing with in regards to inflation.
Here is a longish article that explains your question and why certain items are sometimes removed. Basically there are some items that are more volatile and can mask other issues. In many cases, supplementary data is also available that tracks the excluded items and this gives economists a better idea of what are the underlying trends and account for the more price volatile items later.
[https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328](https://www.forbes.com/sites/qai/2023/01/23/supercore-inflation-excludes-food-energy-and-housing/?sh=31aaee353328)
Generally they look at both and publish both
Food and Energy are generally impacted by different factors than consumer goods, but a spike in one of those two could mask the behavior in consumer goods so most inflation charts actually look at 4 things
All items
Food
Energy
All items not including food and energy
[If food costs start to climb 9.5% due to a specific set of circumstances but the rest of things are only growing at 5.5%](https://www.bls.gov/cpi/) then how much is inflation impacting people? It depends what percentage of their budget is food. The standard weighting for “All items” has inflation at 6% but that really masks the impact that high food costs have on lower incomes and the less significant impact they have on higher incomes.
Its also important to track energy separate because energy costs feed into other goods. If electricity costs increase 10% then that cost gets passed forward in the cost of other products since they now cost more to make so its important to be able to see it as both an input cost and as an end impact on the prices
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