Inflation cooking -- fascinating SUV factoid

Another discovery!

despite the fact that gasoline prices are at all-time highs, and average vehicle mileage recently hit multi-decade lows due to the proliferation of SUVs, the weighting of motor fuel in the CPI index is actually down five percent over the decade, and fuel is pushed into a "non-core" category--even though the purchase of vehicles themselves are considered "core." (3.268(1992) vs 3.119(2002) pct, US BLS). (2)

[gristy]

1. I support your work on possible book cooking regarding inflation, Dan

But the weighting of fuel seems naturally independent of the cost of fuel. But with lower gas mileage and people driving farther each year (I saw that statistic somewhere), I think you are right in questioning why the weighting of motor fuel is down 5%. That just doesn't make sense.

[BeFree]

2. Thanks Dan, keep it coming

It all sounds like a recipe for DISASTER, eh?

[tritsofme]

3. Has fuel ever been counted in the "core CPI"??

I had always had the understanding that its price is too volatile.

Maybe I'm misunderstanding what you're saying.

4. It's absurd the way it is broken out

If there is a lending cycle based on 'low' inflation in the core number, which is fully dependent on an item outside the core number, there is a demand cycle and relatoinship which cannot be ignored.

People do not sit SUVs in the garage.

So if the focus is on the core number, and costs related to the core are hidden in this way, there is a BIG problem.

"volatile" and "going up over the long term" are different.

[treepig]

5. gasoline prices are far from at an all-time high

they were much higher in the early 1980's when adjusted for inflation: