A Measure of Price Pressures
June 25, 2015 5:00am by
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This kind of report and area of “economics” drives me nuts! All these different constructs and hypotheses, many of which are measuring the wrong thing.
And don’t get me started on hedonics and their practice of substituting items to keep measures of consumer inflation artificially low. Has steak become too expensive, then how about consumers just buy hamburger? They’re both made from beef, right?
How about units of measure, which continue to mask pricing increases. For example, good luck finding a half-gallon of ice cream any longer. What was once 64 ounces is now 48 ounces. Don’t mind that 25% reduction in product for the same price. Is that accounted for? Nope.
How about a pound (16 ounces) of cereal? Same box, but you’re now buying 13.25 ounces. That’s 17.2% percent less volume, or said another way, it’s a 17.2% increase in price for a comparable amount of the same product. Does that count as inflation? Nope.
How about housing? How in the hell is housing considered an “asset” when it rises in median price, yet isn’t measured in the same weighting as an “expense” when it’s purchased? How about health care? Higher education?
There’s just so much tortured logic is this area of statistics that I find it as much hocus-pocus and sleight-of-hand as it is scientific in nature.