They ignore those things you purchase every day, and focus instead on things you rarely purchase...things like buying a new home. And with housing prices way down, it makes inflation seem much less that what it really is.
You really should ignore the 3.1 percent rise in the government's Consumer Price Index. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.
This nonpartisan not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don't look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans' typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.
The institute contends that to get a good read on inflation's "sticker shock" effect, you must look at the cost of goods that the average household buys at least once a month and factor in only the kinds of expenses that are subject to change. That, too, eliminates the cost of housing because when you finance your home with a fixed-rate mortgage, that expense remains constant until you refinance or move.
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And, largely as the result of the recent run-up in gas prices, this "everyday price index" (EPI) suggests that Americans are being pinched far more tightly than the official inflation measure would have you believe.
Over the past year, the EPI is up just over 8 percent, according to the economics group. The biggest factor: Motor fuel and transportation costs are up 21.06 percent from year-ago levels. The cost of food, prescription drugs, and tobacco also have increased faster than the government's inflation measure, rising 3.56 percent, 4.21 percent, and 3.4 percent, respectively.
Prior to 2002, CPI inflation may have been a reasonable approximation for the price increases people faced in their everyday purchases. But this is no longer the case. Due to the failed and counterproductive Obama energy policy, some people are now spending over $100 a week just to buy gasoline to get to work.
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This has the strongest impact on individuals who rely on fixed incomes from savings or Social Security. These people need to plan for essentially uncontrollable changes in everyday costs.