alt Hacker NewsThats the issue with CPI, it tells a skewed story because it makes presumptions about volumes of things people buy.
If Eggs go up 0% and Rent goes up 50%, CPI indicates a “25% growth” which is stupid.
Thats the issue with CPI, it tells a skewed story because it makes presumptions about volumes of things people buy.
If Eggs go up 0% and Rent goes up 50%, CPI indicates a “25% growth” which is stupid.
Yes, that would be stupid, which is why it doesn't work that way. The basket is weighted according to how much people spend on each item. Eggs are not weighted the same as rent.
The CPI does have a problem with not updating the basket as frequently as it could, which means it doesn't catch substitution effects and tends to overstate inflation.