I heard this on NPR this morning. In the same report, they said salaries today are actually lower than they were in 2000 when adjusted for inflation. Now that's even more alarming.

I used this to my advantage...by foregoing food and energy, I was able to save 1.7% more than the average American!

Core inflation is a sham. It uses hedonics to keep that number low. A good example of hedonics in use is computers. Let's say you bought a computer five years ago for $1,000. That computer certainly had less computing power than the $1,000 computer today. The BLS uses the five year old computer in its inflation calculations. Now that five year old computer would only cost a fraction of the initial $1,000 you paid (if you could even find it on the market). So the BLS claims that the cost of computers has dropped. The reality is the cost hasn't dropped. You still have to go out and buy a computer today for $1,000.

During the Clinton administration, the BLS altered the way it calculated inflation. If they used the same formula as they did in the 70s, 80s, and early 90s, inflation would be more like 7%. Ouch!

Just a heads up for those of you who receive measly "annual raises." These companies, including my own, screw you out of any sort of actual increase by giving you between 1 and 5% annually.

When raise time comes up, march into your bosses office with a printout of the last year's CPI report. Let him or her know that, in order for you to make the SAME amount of money you made last year, you'll need between 2 and 4%. So, if they come back at you with 2.5%, let them know they are, in effect, giving you a -1.5% decrease in pay when adjusting for buying power.