Do Governments Lie About Inflation?

One of the biggest reasons inflation feels worse than the official numbers suggest is substitution bias.
This means if the price of one item rises too much, the government assumes you’ll switch to a cheaper alternative.
But does that really make life cheaper for you? Not really.

Let’s say you love steak, but the price jumps from $10 per pound to $16 per pound—instead of counting that full increase, they assume you’ll switch to chicken.
But what if chicken rises from $4 per pound to $7 per pound?
Then maybe you’re expected to buy beans instead.

The problem is, this method hides the real cost increases.
The CPI isn’t tracking how much more you’re paying for what you actually want—it’s adjusting the basket to reflect cheaper alternatives...

Private inflation calculators:
https://www.ft.com/content/95745636-2d21-46aa-b0f1-6bda1c0fdd0b
https://truflation.com/calculator
https://calculators.heritage.org/budget-and-spending/personal-inflation-calculator

Sources:
https://www.cato.org/publications/commentary/hankes-inflation-dashboard-official-statistics-misrepresent-real-inflation
https://www.pewresearch.org/short-reads/2022/01/24/as-inflation-soars-a-look-at-whats-inside-the-consumer-price-index/
https://www.ft.com/content/4de96c7c-4cc1-46ac-a0ad-355d6b21765b

Disclaimer:
All videos on the Boring Finance Guy channel do not constitute financial advice and are intended for informational purposes only.