WHY DOES THE CPI NOT PAINT AN ACCURATE PICTURE OF INFLATION
In 2010, CPI has deflating housing prices caused from high unemployment rates and overvaluation of home prices caused from low interest loans and non-conservative loan practices; and rising transportation, food, and recreation costs caused from rising oil prices. The CPI does not seem to paint an accurate picture of inflation. The fed claims 2% inflation, fails too buy gold, and keeps interest rates near zero because of the CPI, PPI, and deflator indicators readings. However, 20-30 potential declines in housing prices will keep the CPI indicator showing low inflation while rising energy prices suggest rising inflation. Increased pressure to consume will be limited as real incomes continue to decline.
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