LewRockwell According to the July Consumer Price Index (CPI) report, prices rose by 2.7 percent over the past year, and by 3.1 percent when the “volatile” food and housing sectors are removed from the calculation.
Markets rose following the release of the CPI since the increase in price inflation was not as high as expected. This led to an increase in expectations that the Federal Reserve will cut interest rates next month.
Of course, the CPI numbers are manipulated to understate the true rate, and effects, of inflation. One way this is done is by “Chained CPI.” This is where the government does not consider consumers impacted by price increases that make their favorite products unaffordable if there are affordable substitutes available – as if government bureaucrats can determine what is and is not an adequate substitute for a good made unaffordable by the Federal Reserve.
The official government figures do not take into account “shrinkflation.” This is when a business responds to price inflation by reducing product size and otherwise reducing a good’s quality. Shrinkflation makes it appear that consumers are paying the same prices but in fact they are paying more since they are getting less of the product.
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