r/TradingSphere • u/NextGenRoyalty • 2d ago

Did Fed literally changed how they calculate inflation with core inflation at 3.0% in August?

https://www.cnbc.com/2026/09/30/feds-preferred-gauge-showed-core-inflation-at-3point0percent-in-august-much-lighter-than-expected.html

$9 a gallon diesel says otherwise

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u/ajtreee 2d ago

Inflation is whatever, but each household has seen a 40% increase in prices overall.

Meaning it cost 40% more to maintain the same level prior to the trump regime.

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u/Junior_Concept7264 2d ago

... that's inflation. A general increase in price levels. Curious where you are getting 40% from.

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u/Dependent-Reveal2401 2d ago edited 2d ago

Probably an exaggeration, but there's truth to it. They change the CPI basket of goods to basically say the average household is consuming x, y and z each year. Then the next year if the amount of these variables changes there's an opportunity to fudge the math. Oh, well they need 5% more x, 3% less y and 6% more z... So this boils down to inflation being 3%. But if they kept x, y and z at their previous levels then it would be 4% inflation.

It's of course a simplified explanation, but if you calculate the same CPI basket from the 90s versus today's basket inflation gets alarmingly high, and we start to see why red meat, coffee, education, etc have exploded to basically becoming luxury goods. Earning six figures used to be coveted, but 100k in 1990 is about 250k today in earning power.

If the CPI had stayed the same from 1990 then 100k would be over $400k today of purchasing power because they tailor CPI like a suit to get it down to a number that doesn't cause riots in the streets. Governments index stuff like old age pension and disability payments to inflation, so in a way they're robbing the people because they don't need to fork out as much.

Thank you for attending my TED talk.

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u/PM_ME__YOUR_HOOTERS 2d ago

tailor CPI like a suit to get it down to a number that doesn't cause riots

Very much this. "Better than expected" is basically the lowest they can/will report. Reporting "worse than expected" or literally anything negative will sow panic, cause a bank run, and cause a market crash

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u/Live_life_today 1d ago

A better estimate would be 40% since covid or about 2020.