📉 Why the CPI is a Poor Measure of Inflation 🛒

The CPI is flawed because its basket of goods and services is highly manipulable:

• If a product gets too expensive (e.g., beef), it’s replaced with a cheaper alternative (e.g., chicken), hiding the real loss of purchasing power.

• Key expenses like housing, education, and healthcare are often underrepresented or poorly accounted for.

• Hedonic adjustments: If a product “improves” (e.g., better features), they downplay the price increase, even though you’re paying more.

Inflation is not a single number—it’s a vector, as different goods and services rise at different rates, impacting individuals unequally.

By underestimating real inflation, the CPI benefits governments while hurting those who rely on wages or pensions tied to it.

#Inflation #Economics #Bitcoin