Government statistics serve government interests, not those of the citizenry…
Empty Pocket Index: A Dollar Disconnect?
By ROBIN GOLDWYN BLUMENTHAL
The government’s consumer-price gauge looks to be out of whack with “everyday” costs. March CPI comes out Friday.
Consumers wondering why they don’t have any money in their pockets to buy dog food at the same time the government is telling them inflation remains tame needn’t worry about their sanity.
As the Labor Department gets ready to report on the consumer-price index for March on Friday, the American Institute for Economic Research is cautioning that “everyday prices” for such things as food, fuel and prescription drugs are skyrocketing.
The think tank estimates that consumer inflation, as measured by its Everyday Price Index, will continue to outstrip the government’s reading in March, in keeping with the trend so far this year. The EPI jumped 1.3% in January and 1.1% in February, compared with the official CPI number of 0.4% in both months, unadjusted for seasonal factors.
“We’re looking at the price of what it costs to live every day,” says Steven Cunningham, research director at AIER. As such, the EPI focuses on more-volatile prices—for things that tend to fluctuate every month, as opposed to the official consumer price index, which captures a broad range of goods, including such big-ticket items as homes and automobiles.
But the CPI “isn’t designed to reflect the experience of the guy on the street; it’s designed for monetary policy,” says Polina Vlasenko, an AIER research fellow who helped create the index. By the EPI’s measure, Americans saw everyday costs jump 8% last year, compared with the 3.1% clocked by the CPI. Worse, AIER thinks, inflation could hit 15% by late 2013.