Recent controversies over CPI methodology

The Consumer Price Index (CPI) has often been the subject of controversy. Historically, the most prominent critics have argued that the CPI overstates changes in the cost of living. Recently, however, some in the investment community and business media have argued that the CPI is an underestimate of inflation. Some have accused the Bureau of Labor Statistics (BLS) not only of errors but also of willfully misrepresenting price change. These arguments have not been addressed to the BLS directly, and in many cases, they reflect serious misunderstandings about how the BLS produces the CPI. In this article, we address each of the key issues in turn. © National Association for Business Economics.