For buying bonds, is the CPI (consumer price index) an accurate reflection of inflation these days?
823137
It's a way to gauge interest rates, but a poor way to gauge personnel inflation.  If you love cheese and movies and have serious health care problems, your personnel inflation rate will probably be several times higher than the CPI.  I was watching one show where this guy's personnel inflation rate jumped 1,500% from the previous year just because of what he bought.
1140485
It would take a whole course to give you a comprehensive response. You might consider signing up for one at a local college.\n\nMeanwhile, in a nutshell, here's what's happening at this time in the economy: The Fed is always concerned with keeping economic growth at an acceptably high level and keeping the rate of price inflation at an acceptably low level.\n\nWhen the economy gets cooking, the money supply expands (that's actually what inflation is). The business community spends more to satisfy their higher level of business activity, and consumers feel rich so they spend more.\n\nThe US economy has been on a five-year expansion. It's reaching the level where inflation is becoming a serious problem. So the Fed has been raising interest rates to try to keep growth from getting too fast. But consumers have borrowed huge, huge amounts, including in mortgages, so if the Fed "slams on the brakes" too hard by raising interest rates too much, the risk is that a severe recession or worse could set in, triggered by that mountain of debt.\n\nMeanwhile, other economies, especially China and India, have been growing at very high rates. They are gobbling up all of the commodities they can find - oil and gas, lumber, base metals, etc. That adds to inflation.\n\nWe are in the midst of a commodities boom. Mining and energy stocks have come a long way up but have a long way still to go. Many companies have done poorly for several years because they don't operate well in a higher-inflation environment (their costs go up faster than they can raise prices).\n\nThat's a lot of information in one short message. As I said, look into taking an economics course. I was a chemist once, but enrolled in business school and loved every minute of it because of the fascinating and useful things I learned.\n\nBest of success.
670776
The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households.  The  Bureau of Labor Statistics publishes CPIs for two population groups:  (1)  the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers  households of wage earners and clerical workers that comprise  approximately 32 percent of the total population and (2) the CPI for All Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-U), which cover approximately 87 percent of the total population and  include in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self- employed, short-term workers, the unemployed, and retirees and others not in the labor force.\n \nThe CPIs are based on prices of food, clothing, shelter, and fuels, transportation fares, charges for doctors' and dentists' services, drugs, and other goods and services that people buy for day-to-day living. Prices are collected in 87 urban areas across the country from about 50,000 housing units and approximately 23,000 retail establishments- department stores, supermarkets, hospitals, filling stations, and other types of stores and service establishments.  All taxes directly associated with the purchase and use of items is included in the index.  Prices of fuels and a few other items are obtained every month in all 87 locations. Prices of most other commodities and services are collected every month in the three largest geographic areas and every other month in other areas. \nPrices of most goods and services are obtained by personal visits or telephone calls of the Bureau's trained representatives.\n \nIn calculating the index, price changes for the various items in each location are averaged together with weights, which represent their importance in the spending of the appropriate population group.  Local data are then combined to obtain a U.S. city average.  For the CPI-U and CPI-W separate indexes are also published by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for 27 local areas.  Area indexes do not measure differences in the level of prices among cities; they only measure the average change in prices for each area since the base period.  For the C-CPI-U data are issued only at the national level.  It is important to note that the CPI-U and CPI-W are considered final when released, but the C-CPI-U is issued in preliminary form and subject to two annual revisions.\n \nThe index measures price change from a designed reference date.  For the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The reference base for the C-CPI-U is December 1999 equals 100. An increase of 16.5 percent from the reference base, for example, is shown as 116.5.  This change can also be expressed in dollars as follows:  the price of a base period market basket of goods and services in the CPI has risen from $10 in 1982-84 to $11.65.\n \nFor further details visit the CPI home page on the Internet at http://www.bls.gov/cpi/ or contact our CPI Information and Analysis Section on (202) 691-7000.
345624
No, it is not.  For instance, the current savings bond rate is 3.20%.  Last year, the inflation rate was 3.42% so your real rate of return on the savings bond is -0.20%.  Factor in a nominal federal tax rate of 15% and your real rate of return is -0.67%.
102289
This site rocks!  http://www.westegg.com/inflation/
668555
Probably not.\n\nSound like old bonds -- I don't think the CSRR is still around.\n\nOld bond certificates really only have neusmatic value. They are not worth anything on the market.
989280
Both parties will tell you that the economy is sound. Bush says inflation is under control. How can this be true? Everything that I buy is from and Atheist / Communist China. Low quality Junk. Yet it cost more than before. Gas prices are up . Groceries and efreight has gone through the roof. I don.t trust any politician or media anymore.
648604
I-bonds are an unusual beast. There are actually two rates that apply to the bonds. The interest rate and the inflation rate. The rate the government reports is the interest rate. The inflation rate is added to the value of the bond as is the interest rate. \n\nOf course the inflation rate is the rate calculated by the Bureaus of Labor Statistics. Who is to ascertain how accurate it really is or whether or not it is fudged? Of course our government would not meaningfully mis-state the facts now would they?
591773
Do you have a specific example?  If you're talking about the current day, it's raising interest rates because GDP growth last quarter was above 5%.  CPI was up more than expected.  These point to inflation, so it's raising rates to combat inflation.\n\nThe only thing is that consumer confidence is down, but that's consumer confidence only.
629550
Its hard to tell for now because its still 2006, but at the end of the year you can use this link to calculate inflation.\n\nhttp://www.westegg.com/inflation/
339120
I doubt it.  There are many different ways to look at the economy.  One of them is the unemployment rate.  During the depression and the times leading up to it, our unemployment rate his 25% or so at its peak.\n\nRight now, we're actually doing better, as the unemployment rate has been steadily decreasing for the last few years.\n\nSee this chart: http://www.economagic.com/em-cgi/data.exe/feddal/ru\n\nAlso, if you go here: http://www.bea.gov/bea/dn/nipaweb/TableView.asp#Mid\n\nGDP has been growing pretty steadily for the last few years, even after taking into account increase in the CPI for inflation.  The economy is actually relatively healthy right .  There's just a lot of big stories on the media because people are paying a lot for gas, so stories about a possible depression sell really well.
292983
Go to google and type in inflation calculator, and pick one of the answers.  The link below works well for me!
396889
Are you investing into a company that is highly leveraged?  Meaning does it have a lot of debt?  If it does, interest rates are important.  \nIn regards with consumer sentiment, there are certain companies that are less sensitive to consumer sentiment.  For example food industry is really not impacted by consumer sentiment because we all got to eat right? =)  Electronics makers are very susceptible to consumer sentiment because you will buy food before you buy that new iPod, though at the rate this country (USA) is going things may change soon.\n\nAleks
519929
inflation rate is calculated with the help of wholesale price index.which consists of a definite number of widely used commodities.it measures the wholesale prices of these commodities and returns the infltion rate in % terms
65836
A substantial increase in inflation will diminish the purchasing power of money.  Say you kept $100 under your bed.  If the inflation rate jumped up to 10% (high), then your $100 can't buy $100 of stuff anymore.  Something that cost $100 last year would cost $110 now.  In essence, you lost 10% of your purchasing power.
152867
It depends on the issue date.  Check the links below.  One is a savings bond calculator and the other is the government website for bonds.
1066776
Adjusted to the US CPI (Consumer Price Index) for inflation, 2.5 million dollars in 1961 would represent purchasing power of $15,592,407.14 at the end of 2005.\n\nThis is the best way to calculate purchasing power, as rates of return vary all over the spectrum depending on investment type, risk level, etc.  \n\nYou could also have bought Enron stock along the way and lost it all.  So, for most examples, CPI adjusted values are the best method of estimating current value of past monetary values.\n\nI hope this has been helpful.\n\nP.S.  Add 1.4% to adjust from year-end 2005 to June 1, 2006.