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Why doesn't the U.S. Government factor food and energy into the inflation rate?

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Why doesn't the U.S. Government factor food and energy into the inflation rate?

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  1. To keep the populance happy that all is well and inflation is not a factor----seems like an outright scam as the most used items in people's lives are---Food and Energy.


  2. Because the government uses money, the real inflation factor, to accrue these items

  3. They do, but they have another rate they call core inflation that does not count those figures.

    Core inflation is a measure of inflation which excludes certain items that face volatile price movements e.g. food products and energy.

    The preferred measure by the Federal Reserve of core inflation in the United States is the core Personal consumption expenditures price index. This is based on chained dollars.

    Since February 2000, the Federal Reserve Board’s semiannual monetary policy reports to Congress have described the Board’s outlook for inflation in terms of the PCE. Prior to that, the inflation outlook was presented in terms of the CPI. In explaining its preference for the PCE, the Board stated: The chain-type price index for PCE draws extensively on data from the consumer price index but, while not entirely free of measurement problems, has several advantages relative to the CPI. The PCE chain-type index is constructed from a formula that reflects the changing composition of spending and thereby avoids some of the upward bias associated with the fixed-weight nature of the CPI. In addition, the weights are based on a more comprehensive measure of expenditures. Finally, historical data used in the PCE price index can be revised to account for newly available information and for improvements in measurement techniques, including those that affect source data from the CPI; the result is a more consistent series over time. —Monetary Policy Report to the Congress, Federal Reserve Board of Governors, Feb. 17, 2000

    The older preferred measure of inflation in the United States was the Consumer Price Index. This is still used as the indicator for most other countries, and is presented monthly in the US by the Bureau of Labor Statistics. This index tends to change more on a month to month basis than does "core inflation". This is because core inflation eliminates products that can have temporary price shocks (i.e. energy, food products). Core inflation is thus intended to be an indicator and predictor of underlying long-term inflation.

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