Why prices go up rapidly and the consumer price index hardly budges.

This is about the best article I have read that explains why costs keep going up but the consumer price index (CPI) hardly budges at all. The government CPI pricing scheme does not reflect the true cost of living but yet all cost of living adjustments are tied to it. Read the article and you will get the deceptive drift.

CPI Two-Step -

Why the CPI Matters

Why, you ask, does the BLS go through all this trouble? Simple: Because the CPI is the single most important index in the world. No matter who you are, this index has a direct impact on the wages you earn, the taxes you pay and the benefits you receive.

Here’s why: Each year, the government uses the CPI to make cost-of-living adjustments (COLA) to Social Security, military and federal pensions and food stamps. They also use it to fine-tune the cost of school lunches, to determine the yield on inflation-protected bonds (TIPS), and since 1985, to adjust the federal income tax structure to prevent inflationary tax bracket creep.

A few percent a year may not seem like much, but when you compound it year after year and apply it to programs covering hundreds of billions of dollars in spending, it really adds up. That goes double for the federal government: With all those programs tied to the CPI, CPI-related adjustments alone amount to one of the larger items in the federal budget