REAL Consumer Price Index up 5.2 percent in 2012

All of the things that go into the CPI are important parts of the consumer experience, but they don't really reflect how people live day to day—most people don't buy refrigerators and cars every day, after all. That's why one group of economists has developed its own real-life index. And by this measure, prices have in recent months been growing far faster than government figures indicate.

The American Institute for Economic Research, a Massachusetts-based firm, produces a monthly Everyday Price Index, which finds that as of September, prices had grown by 5.2 percent over the course of 2012. That's far higher than the 1.9 percent seasonally adjusted increase according to CPI data.

The price index includes basics like food, gasoline, and utilities, but also includes other common expenditures like cable and satellite TV, movie and sporting event tickets, and postage. Meanwhile, it excludes big-ticket purchases like appliances and computers, as well as rent and mortgage payments. Read more >>

A Quick Glance At Real World Inflation

The Casey Report provides a useful glance at the real inflation currently ravaging items that are actually purchased by Americans, not those captured by the Fed's BLS statistics: "On average, our basic food costs have increased by an incredible 48% over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23% on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39% higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36% since last October." Of course, the ongoing deflation in items purchases requiring leverage will continue to skew the CPI so far south to make all those who bought 5 Year TIPS yesterday at negative yields end up losing money on the transaction. More...