Saturday, May 7, 2011

Inflation and Prerecession Trends

Here, Corrections displays the Consumer Price Index and a linear projection of the CPI using prerecession data.  It gives an idea of how the recession impacted inflation so far.  It is further worth noting that the CPI is well-known to overstate inflation (causing social security benefits to outpace real inflation) for several reasons, such as an inability to price quality improvements (it should be clear that the quality of most products has risen over time).  It's also worth noting that older measures (such as those used by shadow statistics) overstate inflation even more by not adapting their measure to new products or changing expenditure patterns.

See the consumer price index and projected consumer price index displayed graphically below (click to enlarge).

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