![]() ![]() The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for - doesn't this switch simply lower the official inflation rate? Individual income tax parameters and Treasury Inflation-Protected Securities (TIPS) returns are based on the All Items CPI-U. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI for Urban Wage Earners and Clerical Workers (CPI-W). Most importantly, none of the prominent legislated uses of the CPI excludes food and energy. However, all consumer goods and services, including food and energy, are represented in the headline CPI. The latter series, widely referred to as the "core" CPI, is closely watched by many economic analysts and policymakers under the belief that food and energy prices are volatile and are subject to price shocks that cannot be damped through monetary policy. The BLS publishes thousands of CPI indexes each month, including the headline All Items CPI for All Urban Consumers (CPI-U) and the CPI-U for All Items Less Food and Energy. Has the BLS removed food or energy prices in its official measure of inflation? Does the Bureau of Labor Statistics calculate the CPI the same way as other nations? Do any differences in method keep the US CPI lower than the CPIs of those other nations?.Has the BLS selected the methodological changes to the CPI over the last 30 years with the intent of lowering the reported rate of inflation?.Is the use of "hedonic quality adjustment" in the CPI simply a way of lowering the inflation rate?. ![]() When the cost of food rises, does the CPI assume that consumers switch to less expensive and less desired foods, such as substituting hamburger for steak?.The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for - doesn't this switch simply lower the official inflation rate?.Has the BLS removed food or energy prices in its official measure of inflation?.
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