From: The Market Oracle
Until now, the discrepancy between actual inflation and the government’s Consumer Price Index (CPI) was largely an academic debate few people paid much attention to.
Now, however, with real-world consumer prices jumping right before our eyes … while the government’s distorted CPI still lingers near the 4% area, the gap between the two is about to burst onto the scene as a scandalous cover-up.
According to John Williams’ Shadow Statistics , the premier source of unadulterated U.S. economic indicators …
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- While the March year-over-year change in the official CPI was only 3.98% …
- The true CPI, based on the same standards as those that prevailed before the Clinton administration, is now 11.58%!
This means that the gap between the official CPI and the alternate CPI is now a whopping 7.6 percentage points.
In other words, the U.S. government could now be understating the CPI by a full 7.6%!
Moreover, over the years, this gap has widened dramatically. Until January 1982, there was no gap whatsoever; and until November 1986, the gap was usually less than 1%. But then, it started widening like mad, and has been getting bigger ever since.
huntert545
Just recently it has become more and more popular knowledge that the CPI is not a tool to measure inflation. Not only do the two changes that the government has made to CPI in 1983, and again in 1993 created a compounding difference on overall REAL inflation, there is a more subtle form of inflation taking place during this recession as well. There are many parts of CPI that are measured in packaging size, rather than contents within the package. Therefore, when private companies change a 32oz bottle of shampoo for a 24oz bottle of shampoo, the price stays the same in the CPI, the consumer is hurt as the dollar continues its devaluation. Check out my recent article on why CPI is a joke!
http://www.thecashflowisking.com