Consumer Price Index excluding food & energy

Discussion in 'Stock Market Education' started by WaveWage, Sep 14, 2015.

  1. WaveWage

    WaveWage Well-Known Member

    Sep 2015
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    Consumer Price Index used by economists often excludes food and energy, believed to be too much volatile to watch inflation numbers. But when I came around that, I had a question about it:
    I think that main of our costs monthly is food, house & energy. House shouldn't be much concerned by exclusion, but for normal consumer, these two spots are clearly important for their purchase power. Why then economists excludes at the same time one of the most important hotspots for consumers, meanwhile it is one of the most volatile hotspots, this for something measuring the consumer's purchase power?

    Maybe I'm just "too much logic" (haha!) and market logic is not getting in my way, but still.
  2. crimsonghost747

    crimsonghost747 Senior Investor

    Mar 2014
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    When measuring purchasing power the goal is often to see how things develop in a much longer term. Talking about years here. Food isn't THAT volatile but as we have seen the price of energy can be... though I would argue that that also balances out in the long term.

    So yeah I pretty much agree with you, though they bring volatility they are also a big part of where the average person's cash goes to. Especially food, it's consumed by each and everyone on every single day, no matter if you are unemployed or a millionnaire.

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