RE:Excuse my rant I commented quite some time ago on the fact that the CPI calculation in most countries, at least in Canada and the US generally understate the true inflation and have done so since the methodology was changed in 1982. The incentive for Governments to do this is quite simple. Both Canada and the US have Government payouts that are adjusted each year for inflation. So if they reduce the inflation number they have to pay out less each year and in succeeding years.
So what exactly was the change in 1982?
Prior to 1982, there was a "fixed basket of goods" which was changed every five years based on a consumer survey. Each item in the basket had a fixed weight in the calculation of the inflation number from one month to the next. In 1982, after the inflation problems in the 70s and early 80s, the methodology was change to a "standard of living" measure. This is a fancy vague statement which really means that the weight of the items in the basket was no longer fixed and it changes each month.
So as an example, let's say the price of beef went more than the price of chicken one month. The calculation for that month would say that people would eat more chicken than beef compared to the previous month and so the beef would be counted less in the inflation rate calculation and chicken would be counted more. This reduced the calculation for inflation from the way it used to be.
The result of this is that the inflation is in effect "doctored" and this has an effect on wage demands and those on Government assistance. In low inflation times and when the relative price of things don't change much, this matters somewhat but when in high inflationary times when the relative of price of things are changing like we are seeing now, this playing around with the calculation becomes quite important. What's worse is that it becomes a political tool. So the Biden Administration claims that inflation is gone down X consecutive months. Funny how it "miraculously" went down a tenth of a percentage point last month!! When was the last month that there was discussion that eggs were counted a lot less than last month in the inflation calculation? Short answer"....NEVER...
The lower inflation rate also has an impact on Central Bank interest rate policy and the stock market raection.