“Chained CPI.” Whotta concept.
You may have heard of this. The Bureau of Labor Statistics has apparently been tallying it for nine years, right along with CPI-U, CPI-W and all the other variations of the Consumer Price Index, including that perennial favorite, “core CPI,” which considers food, fuel, and shelter to be outside of the core costs of our lives.
Anyhow, “chained CPI” isn’t a new concept. But it’s new to me. I’ve just heard of it because there’s talk of shifting to it to determine cost of living increases for social security, federal pensions, veterans programs and such. Now, much as we all might wish to see those expenses go down, is this really an honest way to do it? Especially when you’re talking about little old ladies and disabled vets?
Here’s how chained CPI works, according to a favorite explanation:
The regular CPI measures the costs each month of a market basket of items that average Americans may purchase each month and so it tells us how much prices are rising, what the inflation rate is. The chained CPI is identical, really, to the regular CPI in all respects except one. It includes an adjustment so that if, for example, beef prices rise much faster than chicken prices, and consumers, as a result, buy less beef and more chicken, it picks up the switching from the beef to the chicken, which makes their total costs for the month rise a little less quickly than if you assumed they continued to buy the same amount of beef and the same amount of chicken as before.
Uh huh. And when chicken gets too expensive, the index adjusts your cost of living for lima beans. And when lima beans get too expensive, the index adjusts your cost of living for cat food. Presumably. When you can’t afford cat food, maybe the index goes up again to pay for the cost of a coffin. Who knows?
But from beef you can’t afford to kitty kibble — no inflation! Hey, ain’t it grand?
The government (hack spit) has been cooking the books on COLAs for years. COLAs in recent years should have been much higher than they were.
And not having COLAs for the last 2 years because they say prices haven’t gone up is a joke.
I draw both social security and military retirement so I was hit twice.
You did not mention the “product upgrade” adjustment. For example: If your new cell phone takes pictures and your old one did not, you have a product upgrade. So if the new phone costs the same as the old phone, that is deflationary. It does not matter that you did not want a picture taking cell phone nor does it matter that you cannot buy a new cell phone that does not take pictures. They say you bought more for less so they take a deduction to the rate of inflation. But there is more, if the new phone costs more than the old phone, they do not have to count it since you bought a product upgrade.
The telling factor is that ALL of their adjustments cause inflation to go down.