How Reliable Is The Consumer Price Index?

The consumer price index is fast becoming the Rodney Dangerfield of economic statistics. It just doesn't get any respect these days. Indeed, taking potshots at the CPI, the most often used inflation measure, has become a favorite sport among forecasters. "The monthly CPI report should be like a cigarette package," says Lawrence A. Kudlow, chief economist at Bear, Stearns & Co. "Warning: Excess confidence in this index can be damaging to your investment health."

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