Why do people use CPI instead of labor, housing, or stock prices to gauge inflation?
On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?
How would one differentiate real and nominal wage/salary increases?
>housing
Shelter expenditures presently constitute 33.2% of the CPI basket.
>housing or stock prices
Asset prices are only very loosely associated with inflation.
>On a similar note, why would anyone trust the federal reserve's numbers given how the federal reserve has lied in the past?
lol. (Also, BLS calculates CPI, not the Fed.)
For example, people have been shouting that inflation has already screamed past the Federal Reserve's target (of 2%) if the weight to medicare costs was increased to reflect the true spending of an average consumer(i.e. medicare is a bigger % of expenses of the avg consumer than reflected by the CPI weight). However, the fed refutes that argument and says that its current measure isn't perfect but neither is the solution proposed.
Currently they are looking at something called the Stock Watson model to see if it provides a better gauge. So by no means is it a settled science.
You could make the argument that a better inflation indicator could take these into account, but it wouldn’t be the CPI then.
Rent (and "owner occupied rents") are a part of the bundle used in calculating the CPI.
The owner occupied rent is a calculation of what the rent would be if the owner had paid rent on the house they own. For some background on this:
https://www.philadelphiafed.org/-/media/research-and-data/pu...
I recall, for example, when the standard basket in Italy used to contain Sambuca[0], and was updated in the '00s to instead include Limoncello[1] due to changed consumer habits.
[0] Anise-flavoured liquor, often added to coffee https://en.wikipedia.org/wiki/Sambuca
[1] Lemon-zest flavoured liquor https://en.wikipedia.org/wiki/Limoncello