Understanding US CPI numbers.
March 3, 2011 Leave a comment
As we all know, and some of us bitch about often, the US Fed does not include food and energy costs in their CPI calculation. Indeed, a full 42% of the inflation calculation Stateside is based on home prices!
We have long thought the CPI calculation had but 3 component weightings: Bourbon, baseball bats and botox, but it seems we are wrong. So with house prices (falling) as by far the major component, it is easy to understand why US core inflation is so low.
If they calculated it fairly, US inflation would certainly be above 5%.
Bernanke blinks when he lies. Have you noticed? More with the right eye than left. Sure sign of someone taking the Michael. Having said that, the congress people come across as idiots. All of them. We suspect the only book most of them have ever read is the Bible.