Comments on: Ignore the Inflation Rate http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/ A premiere personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Sat, 21 Nov 2009 16:42:00 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Flexo http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-130059 Flexo Thu, 27 Dec 2007 05:40:39 +0000 http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-130059 Brycef: Perhaps you answered your own question -- if oil affects the price of everything, wouldn't including it in the index be superfluous? Maybe you're onto something there. James: Entirely true. Inflation-linked securities depend on the CPI -- perhaps that's another reason the government has an incentive to keep the reported rate of inflation as low as possible. It keeps the rate on certain bonds low so the government pays out less to those holding its debt. Brycef: Perhaps you answered your own question — if oil affects the price of everything, wouldn’t including it in the index be superfluous? Maybe you’re onto something there.

James: Entirely true. Inflation-linked securities depend on the CPI — perhaps that’s another reason the government has an incentive to keep the reported rate of inflation as low as possible. It keeps the rate on certain bonds low so the government pays out less to those holding its debt.

]]> By: brycef http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129695 brycef Mon, 24 Dec 2007 18:52:00 +0000 http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129695 Increasing energy prices are inflationary because it takes energy to produce everything else. Since we are still a mostly oil-based economy, when oil prices increase, so will most everything else. I have always wondered why the CPI removes this inflationary measure. Must be political. Increasing energy prices are inflationary because it takes energy to produce everything else. Since we are still a mostly oil-based economy, when oil prices increase, so will most everything else. I have always wondered why the CPI removes this inflationary measure. Must be political.

]]> By: James http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129628 James Mon, 24 Dec 2007 04:21:56 +0000 http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129628 Hi CC, A good posting. Thank you. I would point out one small fact, and thats that some investing instruments such as inflation linked bonds, are partially pegged to the CPI, so while its definetly meaningless for one's budget, its not entirely meaningless for ones investments! That said, thanks again for a relevant and well written posting. Best, James Hi CC,

A good posting. Thank you. I would point out one small fact, and thats that some investing instruments such as inflation linked bonds, are partially pegged to the CPI, so while its definetly meaningless for one’s budget, its not entirely meaningless for ones investments!

That said, thanks again for a relevant and well written posting.

Best,

James

]]> By: Honest Dollar http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129627 Honest Dollar Mon, 24 Dec 2007 04:11:44 +0000 http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129627 We spent a whole session in my college intro economics course discussing all the problems with the CPI. The index measures a basket of goods that's updated once a decade. Not only does the price increase calculations cut out food and gas, it also doesn't track the average consumer's spending habits well. My goal, as always, will be to save as much money as I can, regardless of inflation, market averages, or other metrics. We spent a whole session in my college intro economics course discussing all the problems with the CPI. The index measures a basket of goods that’s updated once a decade. Not only does the price increase calculations cut out food and gas, it also doesn’t track the average consumer’s spending habits well.

My goal, as always, will be to save as much money as I can, regardless of inflation, market averages, or other metrics.

]]> By: Mrs. Micah http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129626 Mrs. Micah Mon, 24 Dec 2007 04:05:55 +0000 http://www.consumerismcommentary.com/2007/12/23/ignore-the-inflation-rate/#comment-129626 *sigh* True. Milk has been particularly frustrating. Rice and beans have held pretty stable and they're the basis for a surprisingly large number of our meals...(w/veggies and spices and such). *sigh* True. Milk has been particularly frustrating. Rice and beans have held pretty stable and they’re the basis for a surprisingly large number of our meals…(w/veggies and spices and such).

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