Barron's and inflation coverage

New York-based money manager Barry Ritholtz criticizes Barron’s for its recent coverage about the Consumer Price Index, which measures inflation, on his blog called The Big Picture.

Ritholtz writes, “Barron’s jumps on the ‘We Have Inflation’ bandwagon this week, with two editorials acknowledging what Big Picture readers have long known: Inflation, undermeasured by the BLS, is robust and widespread throughout the economy.”

Later, Ritholtz noted, “We’ve discussed all too many times that CPI fails to adequately capture the perniciousness of rising prices as they are experienced by consumer and corporations alike. Donlan observes ‘Like it or not, we are stuck with measuring inflation by measuring prices. But we must understand that the measurements are made with a rubber yardstick.’

“Ironic. Just as inflation — and the absurdity of the CPI — is finally get the ink it deserves, the acceleration in inflation has begun cooling off.

“Oh, we still have inflation, only its not getting worse at a faster clip anymore.”

Read all of his post here.

I’ve spent the last year being one of the consumers that the government calls up every two or three months to ask about consumer purchases to help them measure inflation. And because I use a software program to track all of the family expenses, I can give them pretty detailed information. But I have yet to figure out how they’re tracking inflation based on the information I am giving them. One month they ask about restaurant purchases, and the next month it’s about sporting goods or tools.