No, Inflation Is Not "Transitory," and It Is Worse than the Government Admits

  • by:
  • Source: mises
  • 03/10/2022
The official CPI in the US was 7.5 percent in January 2022 (to know more about this huge increase, click here). However, if measured by 1980s methodology (as is done by Shadow Government Statistics), the CPI was above 15 percent in January 2022. This huge difference can be explained by the several changes made in the methodology of calculating the CPI since the 1990’s:
Home Prices and Rents

Current CPI methodology does not actually include home prices. And about 1/4 of its calculation is represented by “owner's equivalent rent”. This indicator is based on the following question that the Consumer Expenditure Survey asks of consumers who own their primary residence: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?” So, it is just a guess. As of December 2021, house prices have increased by 20 percent YTD. Over the same period, rents have increased by 17 percent. ‘Owner's equivalent rent’ increased by 3.5 percent. If we use the 20 percent increase of house prices instead of the 3.5 percent ‘owner's equivalent rent’, the 6.8 percent CPI recorded in November 2021 would be 11 percent.

The annual increase in rents (July 2021) as in was 25 percent. This figure is closer to a proper representation of the increase in rents, as the prices listed on are the ones that people actually pay.