by tyrranus
Very brief and abridged version:
Previously, the Consumer Price index (CPI) was calculated using a basket of goods to generate a Cost Of Goods Index (COGI). So, actual prices of actual real world items.
The Bureau of Labor Statistics changed their measurement methods and created a Cost Of Living Index (COLI). “The composite index weights costs based upon spending patterns identified in households with mid-management income, as measured by government surveys.” 1
The two main critics to the current method are John Williams, and David Ranson, both U.S. economists. Williams believes the original methodology is more accurate. ShadowStats is Williams’ website.
Ranson believes that the current method is a lagging indicator and doesn’t reflect accurately the current inflation. He prefers to use a basket of commodities such as precious metals.
Most critics contend that the current method is a purposeful manipulation by the government to show lower inflation numbers.
1 www.investopedia.com/terms/a/accra-cost-of-living-index-coli.asp
The formula has been revised every few years throughout the history, so it’s not like “BOOM, done!” but the COLI first appeared around 1981.
www.bls.gov/opub/mlr/2014/article/the-first-hundred-years-of-the-consumer-price-index.htm