No...? Price is what we use to "see how many dollars you need for some specific good".
To be sure, the P in CPI stands for price, but that doesn't mean it is the same thing as price. The C and I are also there to indicate that it is something else.
No...? Price is what we use to "see how many dollars you need for some specific good".
To be sure, the P in CPI stands for price, but that doesn't mean it is the same thing as price. The C and I are also there to indicate that it is something else.
It's using a fixed value of goods and measuring the price of that basket to measure the value of a dollar.
The price of a dollar is one dollar. That's a useless statistic.
> It's using a fixed value of goods
The CPI basket is definitely not fixed. It is constantly evolving to ensure that the metric is useful. Consumption habits are not fixed.
> The price of a dollar is one dollar.
Technically true, just like the price of one iPhone is the price of one iPhone (assuming equivalent specs), but in the real world price is used to compare the value of different things. Currently, the price of an iPhone 17 Pro is 238 bushels of corn.
The basket shifts but it's trying to stay equivalent. Not in dollar terms but in benefit terms. If it's not trying to have a stable value then it's not a useful measuring stick.
Not in benefit terms, in buying habit terms. CPI tries to be calculated on a regular basis, and thus is only useful if it looks at things people are actually buying. If people used to regularly buy steak, but due to production issues there isn't much to go around, where customers have largely shifted to buying ground beef instead, then steak is no longer a useful item in the basket. It will get phased out in favour of ground beef.
Steak is objectively more valuable in the traditional sense, as evidenced by the price, and also quite arguably more valuable than ground beef in the "benefit" sense, but that doesn't matter. Ground beef is just as good in the basket as CPI only needs to see relative change in price. It is not measuring benefit.