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Is consumer price index the same as inflation?

Is the Consumer Price Index accurate or does it understate inflation?

  • Grocery stores, restaurants, gasoline, even building materials have risen significantly in the past twelve months. Yet the govt says the inflation is around 2-3%. It seems it's a lot higher than that. After-effects of Hurricane Katrina can't be to blame for all these increases.

  • Answer:

    The overall CPI may 2 - 3%, throughout the country, but some areas will be much higher, and some will be lower. The Bureau of Labor Statistics also publishes a CPI for various regions of the country - so if you are concerned, you may want to check that. In California, they publish one for the Los Angeles-Anaheim-Orange County region, another for San Diego, and a third for the San Francisco-Oakland-San Jose area. Also, they publish several different versions - All Items, for Urban Consumers, All Items for All Consumers, etc. So, the inflation rate that the government spouts may not be the most significant one for your situation. Check the Bureau of Labor Statistics website for more info. www.bls.gov

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I am also quite suspicious about the official number. Only electronic gadget prices seem to go down but then the gadget becomes obsolete and another new technology emerges. (5.25" floppy, 3.5" floppy, zip, CD-R, USB flash, DVD-R, ???). But electronic gadgets are such a small part of our budget compared to housing, cars, utilities, food, car operation expenses which have all gone up a lot. I hope to see some difinitive answers on this question.

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