Government hides true inflation rates, expert reveals truth

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When the Labor Department’s latest consumer price index showed a 0.2% increase for February, resulting in a 2.8% inflation rate, many accepted these figures at face value. However, some experts suggest the real story might be more complex.

Ken Davis, a regulatory consultant and former federal banking examiner, raises important questions about the accuracy of these widely-reported statistics. “People need to never forget that the methodology the government uses to calculate a CPI figure that it reports … and the one that gets released in the media and creates all this discussion … that methodology has changed drastically since it was first implemented,” said Ken Davis. “And it’s changed in a way that makes inflation artificially look lower.”

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Davis believes there’s a deliberate understatement of inflation in official reports. “Inflation is worse than the government reports it to be,” Davis said. “And I think it’s intentional.”

The Federal Reserve, according to Davis, benefits from these understated figures as they help maintain public confidence in monetary policy decisions. “The Fed does not want to create a panic in the markets or among consumers,” Davis explained. “So if the CPI looks tame, it enhances the Fed’s credibility and avoids legislative or public backlash.”

The calculation methods used to determine inflation rates have come under scrutiny, particularly regarding adjustments for consumer behavior and product substitution. “If you used to buy steak and now you buy hamburger, they change the basket of goods the CPI is based on to reflect that,” Davis said. “But that doesn’t mean your cost of living hasn’t gone up. You’re just getting less for your money.”

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These calculation methods affect various aspects of the economy, from Social Security adjustments to wage negotiations. “The average American knows things cost more – whether it’s rent, insurance, or food,” Davis said. “But the official numbers don’t reflect that truth.”

Davis encourages consumers to look beyond headline inflation figures and consider alternative economic indicators. “It’s not about politics; it’s about math and methodology,” Davis said. “And the math tells a different story from the headlines.”