Inflation looks like it is under control with the latest number released today. The headline rate is at 2.7 percent but the CPI less food and and energy is at 1.2%. However, the inflation story has a higher level of complexity based on the method used for calculating the inflation rate. The revisions for calculating inflation tries to account for the increased quality of goods. If you buy a computer which is more powerful as the one purchased two years ago, the price has declined.
Given the revisions in calculating inflation, you cannot compare the inflation from the early 1980's with the inflation today. The method is different. The hedonic price method used today will lead to a lower inflation rate. However, there is a website which calculates inflation using the old method, John William's shadow government statistics. Using this method will provide a real eye opener with inflation actually touching 10%!
Inflation is back, but we are just not calculating like the good old days.
Given the revisions in calculating inflation, you cannot compare the inflation from the early 1980's with the inflation today. The method is different. The hedonic price method used today will lead to a lower inflation rate. However, there is a website which calculates inflation using the old method, John William's shadow government statistics. Using this method will provide a real eye opener with inflation actually touching 10%!
Inflation is back, but we are just not calculating like the good old days.
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