Go click through the BLS site for CPI reporting: https://www.bls.gov/cpi/
See "When the cost of food rises, does the CPI assume that consumers switch to less desired foods, such as substituting hamburger for steak?" and "Is the use of "hedonic quality adjustment" in the CPI simply a way of lowering the inflation rate?".
The best you can do is have a statistic that you stay with and compare.
The plan was to reduce cost of living adjustments for government payments to Social Security recipients, etc. The cuts in reported inflation were an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible: to vote against Social Security. The inflation-calculation changes had the further benefit to government fiscal conditions of pushing taxpayers artificially into higher tax brackets, thus increasing tax revenues. The changes afoot were publicized, albeit under the cover of academic theories. Few in the public paid any attention.
Katharine G. Abraham, then commissioner of the Bureau of Labor Statistics, laid out her recollections in an August 1996 paper:
“Back in the early winter of 1995, Federal Reserve Board Chairman Alan Greenspan testified before the Congress that he thought the CPI substantially overstated the rate of growth in the cost of living. His testimony generated a considerable amount of discussion. Soon afterwards, Speaker of the House Newt Gingrich, at a town meeting in Kennesaw, Georgia, was asked about the CPI and responded by saying, ‘We have a handful of bureaucrats who, all professional economists agree, have an error in their calculations. If they can’t get it right in the next 30 days or so, we zero them out, we transfer the responsibility to either the Federal Reserve or the Treasury and tell them to get it right.’”[v]
A further comment was noted in a 2008 San Francisco Chronicle article, “In the 1990s, for example, Republicans wanted to make changes in calculating inflation along the lines recommended by a special commission, including more use of quality adjustments. By lowering the official inflation rate, such changes promised to reduce the annual cost-of-living adjustments for Social Security and other federal programs.
“[Katherine] Abraham, the Clinton bureau [of Labor Statistics] commissioner, remembers sitting in Republican House Speaker Newt Gingrich’s office:
“ ‘He said to me, If you could see your way clear to doing these things, we might have more money for BLS programs.’ ” [vi]
Federal Reserve Chairman Alan Greenspan and Michael Boskin, then chairman of the Council of Economic Advisors, were very clear as to how changing or “correcting” the CPI calculations would help to reduce the deficit. As described at the time by Robert Hershey of the New York Times, “Speaker Newt Gingrich, Republican of Georgia, suggested this week that fixing the [CPI] index, with its implications for lower spending [Social Security, etc.] and higher revenue [tax bracket adjustments], would provide maneuvering room for budget negotiators …” [vii]
“Alan Greenspan, chairman of the Federal Reserve, is among the other Government officials who have spoken optimistically about financial benefits of a more accurate [CPI] index …” [viii]
“[E]conomists believe one of the most important [CPI upside biases] is when consumers shift their buying patterns in response to changing prices, substituting one product for another. The [CPI] index is based on a fixed market basket of goods and services. But, for example, if the price on an item like steak gets too expensive, consumers may switch to hamburger.” [ix]
The Boskin Commission Report, December 4, 1996, actually used steak and chicken for its substitution example. The examples used in arguing for changing the CPI clearly were tied to prices rising and resulting consumer demand shifting to a lower-quality product. Simply put, that was the destruction of the cost-of-maintaining-a-constant-standard-of-living concept and was the primary consideration of those seeking to change the CPI, although other issues would come into play. The drive here was as to get a lower inflation reading, irrespective of whether the data were “more-accurate.”
Reference: http://www.shadowstats.com/article/no-438-public-comment-on-...
7% inflation with the current basket is meaningless to everyone but economists, but 20% inflation on the major household expenses tells you how much your bills are going to go up in real life.
If you follow the official data 3 years back to pre-COVID/loose(r) fiscal policy in October 2019, then restaurant food prices are up 18.8% according to BLS, which is right in line with the Dollar Menu datapoint you provided.
Perhaps your angle is more in the vein of Goodhart's law, in which case I'm not sure what kind of market moves one would make with that information.
Milk is also traditionally a loss leader for stores. 10 years ago stores were paying $4/gallon for their milk while only charging $2. They made that up by profit on other items you bought at the same time as milk. So if stores are changing this marketing tactic that alone brings milk to a normal price.
The price of milk is very volatile normally. When there is too much or too little rain the price goes up as there is less crops for the cow to eat. When rain is in ideal amounts the input costs go down and so the price of milk goes down. (milk prices are federally regulated so supply and demand do not apply!)
Fast food has had the dollar menus for over a decade, just 2% inflation over a decade means they should be $1.22 now. I can't remember when dollar menus first came out, but I think it was closer to 2 decades ago, which would bring the prices closer to $1.50 just on modest inflation.
There are a lot more factors like the above that make calculating inflation very hard.
They include the screen area of the TV in the calculation, so TVs are getting better for the price, but not cheaper to the extent being suggested.
So this argument doesn't really belong in a discussion about annual inflation.
Just because you happen to be a 6 foot tall US adult male, doesn't mean that the claim that the average height of a US adult male is 5 foot 9 inches (according to google) is a lie.
By excluding prices which make the number look bad despite them potentially being the numbers regular people actually care about. The same is true of including prices which look good but don’t matter as much.
And then by marketing that average number as a realistic approximation of price increases in day to day life.
> "Over the years, the methodology used to calculate the CPI has undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI as a purposeful manipulation that allows the U.S. government to report a lower CPI."
https://www.investopedia.com/articles/07/consumerpriceindex....
It's comparable to excluding long-term unemployed people from the unemployment statistics to make that number look better.
So despite it still being a joke indicator, it does tell us something useful (which is a sort super rough cost of living indicator).
The MoM and now YoY numbers show the rate is slowing.
https://en.m.wikipedia.org/wiki/Marketing_orders_and_agreeme...
Edit: I notice this article actually does include rent (but not the cost of buying a house), but from what I understand, it's usually excluded. Including rent but excluding purchase price is also weird.
If you live in Louisville, KY, then milk was $3.21 in 2015, $2.29 in 2020, and $2.49 in 2022, per gallon - you would be paying less for milk now than 7 years ago.
While the simple average for the US was $3.80, $3.51, and $4.41 for those years.
That's 12% per year across two years, while the linked-to chart says 13.2% since last year - quite comparable.
FWIW, the most expensive were (2015) Milwaukee, $4.29, (2020) Kansas City, MO, $4.45, and (2022) Kansas City, MO $5.76.
My sources are: "Retail Prices for Whole Milk, Average of Three Outlets, Selected Cities, by Months, 2015" - https://web.archive.org/web/20170211163314/https://www.ams.u... .
Simple average, January 2015, whole milk = $3.80.
Cheapest, $2.62 in Detroit. (When did you pay $2 for milk? I used to pay $0.99/gal but that was in the 1990s.)
2020 numbers at https://web.archive.org/web/20201101142332/https://www.ams.u... :
> October 2020 Highlights: U.S. simple average prices are: $3.51 per gallon for conventional whole milk,
Cheapest, Louisville, KY, $2.29. (in 2015 it was $3.21).
2022 numbers at https://web.archive.org/web/20221109074011/https://www.ams.u...
> October 2022 Highlights: U.S. simple average prices are: $4.41 per gallon for conventional whole milk
Cheapest, Louisville, KY at $2.49.
People and businesses buy much more than staple items and so the typical basket of goods and services used to calculate the official inflation number includes many more things.
There-in the manipulation comes.