To break down the annual inflation rates using the original basket of goods from when GDP or CPI first started being measured (around the 1930s), we would need to account for several factors over the decades, focusing on those components of the basket that have been consistently altered, substituted, or adjusted out of the official metrics.
Unfortunately, precise year-by-year inflation rates using the original methodology are not officially tracked, but we can give a rough estimate based on various sources like ShadowStats and historical comparisons.
Let’s consider the breakdown:
### Key Assumptions:
1. **Pre-1980 Methodology**: We use the original CPI methodology before significant changes started, including adjustments like substitution, hedonic adjustments, and changes in weighting.
2. **Shadow Statistics Approach**: A widely referenced method suggests that if inflation were calculated using older methodologies, the rates would be consistently 4-8 percentage points higher than what is officially reported, depending on the year.
### Estimated Annual Inflation Rate Using Original Basket (1930s to Present):
- **1930-1950**:
- Average inflation rate: 1-3% (relatively low during the Great Depression, then rising slightly during and post-WWII).
- **1950-1970**:
- Average inflation rate: 3-5% (reflecting the post-war economic boom and gradual price increases).
- **1970-1980**:
- Average inflation rate: 7-12% (high inflation driven by oil crises, stagflation, and the removal of the gold standard).
- **1980-2000**:
- Average inflation rate (original methodology): 6-8% (compared to the official rate of 2-3%). This era saw significant changes to how inflation was calculated, including the introduction of substitutions and hedonic adjustments.
- **2000-2010**:
- Average inflation rate (original methodology): 8-10% (compared to official rates of around 2-3%). Major cost-of-living increases occurred, especially in housing, healthcare, and education.
- **2010-2020**:
- Average inflation rate (original methodology): 8-10% (compared to official rates of 1-2%). Persistent underreporting of inflation as real costs of essentials rose significantly.
- **2020-2024**:
- Average inflation rate (original methodology): 10-15% (compared to official rates of 3-8%). The COVID-19 pandemic, supply chain disruptions, and monetary policies drove real inflation far higher than reported.
### Summary
Using the original basket of goods and services from the early days, the cumulative annual inflation rates would likely have been:
- **1930-1950**: 1-3% annually
- **1950-1970**: 3-5% annually
- **1970-1980**: 7-12% annually
- **1980-2000**: 6-8% annually
- **2000-2010**: 8-10% annually
- **2010-2020**: 8-10% annually
- **2020-2024**: 10-15% annually
These figures provide a rough estimate of what inflation might look like if we kept the original basket of goods without making modern adjustments. The average inflation rate over this period would suggest a much higher cost of living than officially reported numbers indicate.
