All such indices show the same broad inflation trends, usually shifted by a small amount. These trends are also consistent with private replication efforts such as the Billion Prices Project (http://www.thebillionpricesproject.com/), which uses directly-sampled retail-price data.
> They conveniently don't track things like fuel prices or food because they are too "volatile".
They do in fact track these things. They are excluded from core price indices because of their volatility; setting monetary policy based on gas or food prices would result in wild swings from month to month. Core CPI changes show the same broad trends as the full CPI (https://fred.stlouisfed.org/graph/?g=Dtzv), without a persistent level difference.
> But the reality is that upper income people have 401ks with stocks in them and lower income people live paycheck to paycheck.
... and your policy prescription would hurt just this category of people the most. The only lever the Fed has on inflation is to raise interest rates, which also acts to reduce demand in the economy. All other things equal, that throws people out of work and risks causing a recession.
Your concern for ordinary people is admirable, but focus on so-called "asset price inflation" would exactly put the interests of capital-owners (seeking larger risk-free return) over people without existing assets. In fact, unexpected inflation is better for those without financial wealth than those with it.
Yes they do. The Producer Price Index (https://www.bls.gov/ppi/) tracks price levels of goods used for production; the PCE index (https://www.bea.gov/data/personal-consumption-expenditures-p...) avoids basket effects by re-weighting using current expenditures rather than baskets that might drift out of date; the GDP Deflator (https://fred.stlouisfed.org/series/GDPDEF) uses all goods produced rather than just a producer/consumer basket.
All such indices show the same broad inflation trends, usually shifted by a small amount. These trends are also consistent with private replication efforts such as the Billion Prices Project (http://www.thebillionpricesproject.com/), which uses directly-sampled retail-price data.
> They conveniently don't track things like fuel prices or food because they are too "volatile".
They do in fact track these things. They are excluded from core price indices because of their volatility; setting monetary policy based on gas or food prices would result in wild swings from month to month. Core CPI changes show the same broad trends as the full CPI (https://fred.stlouisfed.org/graph/?g=Dtzv), without a persistent level difference.
> But the reality is that upper income people have 401ks with stocks in them and lower income people live paycheck to paycheck.
... and your policy prescription would hurt just this category of people the most. The only lever the Fed has on inflation is to raise interest rates, which also acts to reduce demand in the economy. All other things equal, that throws people out of work and risks causing a recession.
Your concern for ordinary people is admirable, but focus on so-called "asset price inflation" would exactly put the interests of capital-owners (seeking larger risk-free return) over people without existing assets. In fact, unexpected inflation is better for those without financial wealth than those with it.