Have you ever wondered why today’s reported rate of inflation seems so much lower than what we’re really experiencing when we buy things like food, gasoline, and other products and services? This is because the way that the index is calculated has been altered, removing important items like food and energy from the baseline calculation.
So if food and energy have been removed from the baseline calculation of the CPI index, it’s easy to see why the reported inflation rate of approximately 2.4% grossly understates the real rate of inflation.
Keeping this in mind, take a look at the Chapwood Index, which shows us the much more realistic figures for the real rate of inflation within major U.S. cities. This index shows us that over the past five years, the rate of inflation in ten major U.S. cities has really been between approximately 9-12% per year: