Price Appreciation
Is someone manipulating government inflation numbers for political gain?
That’s what a lot of Americans say about the most common yardstick, the consumer price index (CPI), which tracks the cost of a basket of household goods and services and often makes headlines. If they’re paying close attention, they may say the same about the more obscure personal consumption expenditure measurement (PCE), a model based on CPI that the Federal Reserve uses to target inflation.
But honorable public servants compile that data, according to former Congressional staff economist Alan Cole.
“The U.S. Bureau of Labor Statistics indices for inflation are trustworthy in the sense that these people are serious, they are unbiased, they’re not trying to push an agenda,” Cole said. “Their personal honor, their integrity, is solid.”
But that doesn’t mean their jobs are easy. “The very act of defining, much less measuring, inflation is actually much, much more of a judgment call than a lot of people realize,” he noted.
In any case, government tallies show cumulative prices rose a little over 50% in the past two decades—as the accompanying graphics illustrate.
