Is gasoline part of the CPI or not?

CaptHenway

This morning the media are reporting that the CPI is down for June because gasoline prices fell.

I thought that TPTB had eliminated energy and food prices from the CPI because they kept going up and up and contradicting the official Newspeak that "There is no inflation!"

Am I in error?

Baley

when something goes up, "they" take it out, and when it goes down, they put it in. Then we can have Interesting Headlines!

tincup

I think there are several different CPI calculations; we seem to hear about the one that is most advantageous for TPTB.

Or... Maybe we are confusing CPI with the core inflation rate. The core inflation rate, if I recall, takes out the items you mention. That is the one they like to keep low so they can avoid increasing SS payments, etc.

57loaded

here's a start

and the FAQ

roadrunner

Gasoline is included under the CPI-U. Motor fuel is approx 5% of the CPI-U while energy/utilities is another 5%. When the govt reports the core CPI, then that doesn't include energy or food. Both energy (10%) and food (15%) are well represented in the CPI. So removing the most volatile 25% of the index to report core CPI does turn the tables. That's even more obvious when homeowner's imputed rent and durable/stable goods account for approx 50-60% of the index. They don't change or change very slowly over the years. So taking more than half of the variable part of the index away skews results and tends to hide when inflationary forces are picking up. The home price rise from 1996-2008 was not part of any inflationary calculations.

roadrunner

CaptHenway

<< <i>here's a start

and the FAQ >>



Thank you.

So they figure it both ways, and then report whichever one sounds better.

fastrudy

Ironic...Funeral expenses are included in the CPI

CaptHenway

Hey, I paid some last year. A very real expense.

roadrunner

<< <i>Ironic...Funeral expenses are included in the CPI >>



Driving to the funeral is too.

Lots of things aren't really covered, especially fees, various taxes, and one time expenses.
I'd also seriously question how accurate the data for medical car is with the average being approx 6.6% of CPI-U. Has the additional burden for long term
managed care policies been included or kept current as these policies were not main stream 10 yrs ago? As people drop out of the work force and cannot
afford health insurance, better food, and better schools I would imagine that results in a CPI drop as buyers are substituting lesser quality items or deciding just
not to buy those items at all.

Per the CPI the average person/family earining $75,000 per yr only spends $345/yr on health insurance. Seems on the low side to me. And if long term care insurance
as well as public and home care facilities for the elderly is tossed in, it comes to $543/yr.

Funeral expenses for a $75K/yr income is $127/yr. That might not cover a 100 mile drive, meals and hotel for one day. And that amount is larger than the CPI lists for
fresh seafood and fish. My wife buys 1 lb. of "fresh" ocean salmon once every 10 days and that comes to $430/yr. That would say that the average person has wholesome
fish less than once per month.....unless you count Long John Silver's or a McFish as "fresh." If you want farmed (ie excremental) salmon you can probably save 30%.

roadrunner

AUandAG

Brian, when they calculate funeral expenses they take into account all the "potter's field" burials.
Those buried at little or no cost, like those in the desert, swamp, forest or ocean are probably
thrown in as well. Prisoners and Psychiatric hospital patients are next to nil in costs.

I don't really think that salmon is ever on the plate of 99% of the populace. More catfish, anchovies
and smelts are more likely.

bob

CaptHenway

FWIW, there is a company called Dignity Memorial Services that is buying up cemetaries all over the country and then boosting fees severely. When my wife's aunt and uncle died 13 years ago the fee charged by the independent cemetary to place their already-cut headstone in the ground was $150. Her father died last year and the fee to place his headstone was $650. Just placed Jean's headstone in the family plot and the fee is now $725.

BTW, they also cut headstones. Go someplace else. It will be cheaper.

TD

Konahead

They all make me sick and wouldn't know the truth if it fell on their heads. They just make it up as they go along.

MoneyLA

Over the years, I discovered a lot of flaws in the government statistics, some of which led to changes in how Uncle Sam does things today. I wrote reports for Barrons and did reports on CBS which led to changes in how the CPI was changed in the 1970s to include the report for "all urban consumers."

My biggest criticism of the CPI index is that it does not reflect the buying patterns of anyone. My biggest example: the cost of having your appendix removed was put into the CPI back in the 1970s... but you can only have it removed once.

My investigation into how the unemployment stats were collected led to the new stats that include "phantom unemployed" or those who are out of work but are not looking for work.

My biggest dispute with the govt stats is that the unemployment stats are based on monthly census surveys done during one week of each month. And as I pointed out in the 1970s, companies would plan "short layoffs" of up to three weeks to be made on "non census weeks." This way, companies can be shut down for three weeks at a time with no change in the unemployment rate.

My report on the Smith Corona layoff made it to the White House Reading List. Smith Corona shut down its entire plant for three weeks, which idled 40% of the workers in Ithaca, New York in the mid 1970s. But because the layoff started the day after the "census week" and ended the day before the census week, the layoff did not show up in the unemployment stats. On the books for that month, the county that Ithaca was in had a jobless rate of about 6% even though more than 40% were out of work.

You want one more? The government reports "housing starts" which means turning over a spade full of earth for each home site. There is no report on "housing finishes." Nixon asked his builder friends to "start houses" to help boost his image in an election campaign. They sent workers out with shovels to start houses on empty land. The houses were never "finished."

And back to the CPI: whats the inflation rate for a meat eating family vs a vegan family? Whats the inflation rate for a family that goes skiing vs a family that goes to the beach? whats the inflation rate if you have a hybrid car vs a gas guzzler?

CaptHenway

Interesting. Thanks!
TD