Is Official Inflation Data Fake?
- By Bilal Hafeez
- 1 min read
‘If there’s no inflation, why are prices up so much?’ So reads a Time article from 2013. Today, this sentiment returns: ardent inflation bulls argue that official data underreports inflation. Accordingly, they see recent US CPI data showing headline inflation of 1.7% as wrong (Chart 1). But they see money supply measures, such as M2 (which has shot up 25%), as correctly showing inflation. Some have even constructed their own measures of ‘true’ inflation.
One example is Shadow Government Statistics (SGS), which keeps weights of the consumption basket fixed from 1980. By their measure, inflation currently runs close to 10% (Chart 2). Ironically, their measure has been stable since the global financial crisis despite central banks printing money, which counters the thesis of many inflation bulls.
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