In his April 16 letter, John Severson raises concerns about the underestimated impact of inflation on consumers. The Consumer Price Index (CPI), a key measure of inflation, is not accurately reported due to the omission of shrinkflation, which involves reducing the contents of a package without reducing its price.
Under President Joe Biden, shrinkflation has not been factored into the CPI as a price increase. This is attributed to difficulties in gathering statistics. As a result, the base against which future CPI increases are calculated is understated.
Even if the reported CPI increase were accurate for the current fiscal year, the understated base would lead to compounded errors in future CPI calculations. Retirees relying on Social Security or federal retirement checks are particularly vulnerable, as their income adjustments are based on the CPI.
The compounding effect of these errors is a serious concern that requires immediate attention to ensure that consumers, especially retirees, are protected from the true impact of inflation.
