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"The US Consumer Price Index hasn’t been adjusted for the pandemic"
Time, 30 October 2020
The US Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
The US Bureau of Labor Statistics (BLS) reported a 1.2% increase in the CPI (YoY) on 12 November, unchanged from the previous month (before seasonal adjustment).
However, the basket of goods and services that mirrors the typical consumer’s spending, hasn't been updated by the BLS since December 2019, before the pandemic hit.
As Time has reported on the 30th of October, the crisis has profoundly changed the way we work and socialise, and, of course, the way we spend money. Taking into account the altered purchasing behaviours, Alberto Cavallo, associate professor at Harvard Business School, has constructed the a new targeted measure, the "COVID CPI", including the altered spending patterns in the US.
Cavallo found that "Americans have been buying more food and alcoholic beverages (giving them more weight in his coronavirus-adjusted calculations), while spending less on transportation and recreation (giving them less weight). Supply disruptions, meanwhile, have also caused the prices of some goods to increase."(1)
Results suggest that household spending has increased more than the official CPI numbers suggest.
Tabula's US Enhanced Inflation ETF is the first ETF to provide exposure to both realised and expected inflation