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Are there good alternatives to the CPI?

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  • Charles Steindel

Abstract

Critics of the consumer price index--the most widely watched inflation measure--contend that it overstates inflation by as much as 1 percentage point a year. Some have argued that alternative indexes eliminate the CPI's upward bias and offer a more accurate reading of inflation levels. A closer look at these alternatives, however, reveals that they have substantive problems of their own, suggesting that the CPI, though flawed, is still our most reliable indicator of changes in inflation.

Suggested Citation

  • Charles Steindel, 1997. "Are there good alternatives to the CPI?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 3(Apr).
    • Handle: RePEc:fip:fednci:y:1997:i:apr:n:v.3no.6
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    References listed on IDEAS

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    1. Michael F. Bryan & Stephen G. Cecchetti, 1993. "The consumer price index as a measure of inflation," Economic Review, Federal Reserve Bank of Cleveland, vol. 29(Q IV), pages 15-24.
    2. Matthew D. Shapiro & David W. Wilcox, 1997. "Alternative strategies for aggregating prices in the CPI," Review, Federal Reserve Bank of St. Louis, issue May, pages 113-125.
    3. David E. Lebow & John M. Roberts & David J. Stockton, 1992. "Economic performance under price stability," Working Paper Series / Economic Activity Section 125, Board of Governors of the Federal Reserve System (U.S.).
    4. Stephen G. Cecchetti, 1997. "Measuring short-run inflation for central bankers," Review, Federal Reserve Bank of St. Louis, issue May, pages 143-155.
    5. Fiona Sigalla & Mark A. Wynne, 1994. "The consumer price index," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 1-22.
    6. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
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    Cited by:

    1. Charles Steindel, 1999. "The impact of reduced inflation estimates on real output and productivity growth," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Jun).
    2. Granger, Clive W. J. & Jeon, Yongil, 2003. "Comparing forecasts of inflation using time distance," International Journal of Forecasting, Elsevier, vol. 19(3), pages 339-349.
    3. Vink, Nick & Kirsten, Johann F. & Woermann, C., 2004. "South Africa's Consumer Price Index for Food (CPIF): A Comparative historical view," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(2), pages 1-11, June.
    4. Todd E. Clark, 1999. "A comparison of the CPI and the PCE price index," Economic Review, Federal Reserve Bank of Kansas City, vol. 84(Q III), pages 15-29.
    5. Gregor W. Smith, 2009. "The Missing Links: Better Measures of Inflation and Inflation Expectations in Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 287, April.
    6. Ionut - Cristian BACIU, 2015. "Measures Of Core Inflation Used By The National Bank Of Romania," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7(1), pages 17-30, March.

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    Keywords

    Consumer price indexes;

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