The problem with the consumer price index as a measurement for inflation and future interest rate trends

A friend of ours recently reminded us of the problem with relying on the consumer price index (CPI) when trying to measure inflation. Remember, social security payments are based on the CPI, which is merely a basket of goods surveyed by the Bureau of Labor Statistics (BLS.) In our opinion, the use of CPI has become even less relevant as commodity specialists apply hedonics (Greek for “at your pleasure,”) which allows the BLS to make adjustments for quality in the compilation of this figure. For example, Timothy Aeppel of the Wall ...