The main gauge of inflation does not take into account key expenses that have increased for consumers since the pandemic – including credit card interest charges And auto loans, tips and even fees paid to baby sitters and dog walkers.
The Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics, measures the average change over time in the prices paid by consumers for a representative basket of goods and services.
But consumers’ everyday expenses, including gas, groceries, medical expenses, travel and rent, are much larger than those tracked by the CPI, according to experts.
“The CPI is capturing the goods and services you buy to consume, but also the things that affect your cost of living,” said BLS economist Steve Reed. told Bloomberg News.
“And so its actual value cannot be put.”
While CPI measures how much is spent on specific goods or services, it does not take into account the interest rate in effect. Credit card debt that grows every month.
Americans have approximately $628 billion in credit card debt that has not been repaid. The typical interest rate is around 22%, which equates to a large amount of money.
In August 2022, the average rate across all accounts was 16.27% – or 25% less than the previous month.
BLS analysts who compile CPI data also view housing as an investment decision, not an everyday expense. Accordingly, the CPI does not account for home prices, mortgage payments, and property taxes, which can add up to thousands of dollars per year depending on price fluctuations.
Single-family homeowners in the U.S. paid a total of $363.3 billion in property taxes last year — a 6.9% increase from the $339.8 billion they’ll pay in 2022, according to ATTOM, which analyzed 89.4 million homes nationwide. Growth.
The 6.9% increase is the largest in five years.
The report also found that the average tax on single-family homes increased 4.1% last year to $4,062. This is followed by an increase of 3% in 2022.
Another metric – homeowners insurance – is not included in the CPI calculation, although it accounts for a related category called “renters and home insurance” as part of the shelter index.
According to experts, if homeowners insurance is included in the CPI, it is likely to increase the headline inflation numbers.
The BLS says on its website, “CPI does not necessarily measure your own experience with price changes.”
“The national average reflects millions of individual price experiences; It rarely reflects the experience of any particular consumer.”
Lottery tickets, marijuana use, paying parking tickets and other legal expenses are also not included in the CPI.
Inflation last month fell to its lowest level since it first started rising more than three years ago.
Consumer prices rose just 2.4% in September from a year earlier, down from 2.5% in August, and the smallest annual increase since February 2021.
When measured month-over-month, prices rose 0.2% from August to September, the Labor Department reported earlier this month, which was the same as last month.
But excluding volatile food and energy costs, “core” prices, a gauge of underlying inflation, remained high in September, driven by the rising costs of medical care, clothing, auto insurance and airline fares.
Core prices in September were up 3.3% from a year earlier and 0.3% from August. Economists closely monitor core prices, which generally provide a better indication of future inflation.
with post wire
