Economics
In the Lockdown Economy, Old Measures of Inflation Get It Wrong
- Sudden shift leaves price baskets out of step with consumers
- Inflation is higher for goods Americans actually are buying
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Inflation is one of the great question marks of the coronavirus era, with some economists predicting it’s poised to take off and others warning of a deflationary slump.
For the technicians of inflation, there’s a more immediate challenge: how to measure it properly. Right now, the cost of lockdown living is higher than headline gauges suggest.
The broadest price measures are based on a “basket” of the goods and services that consumers typically spend their money on. And that basket has gotten cheaper during the pandemic. In the U.S., for example, the main price gauge posted its biggest month-to-month drop for more than a decade in April.