Comments on: CPI: How Many Negatives Make it Deflation? http://www.canajunfinances.com/2009/10/19/cpi-how-many-negatives-make-it-deflation/ Personal Finances and Consumer Concerns, essays, stories, examples and how to articles with a distinctly Canadian Point of View Sun, 21 Mar 2010 11:06:19 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Neil http://www.canajunfinances.com/2009/10/19/cpi-how-many-negatives-make-it-deflation/comment-page-1/#comment-6072 Neil Mon, 19 Oct 2009 14:19:39 +0000 http://www.canajunfinances.com/?p=3039#comment-6072 It becomes deflation when core CPI goes negative. Until then, it's fluctuation in volatile items (note that core CPI excludes both food and energy, the two biggest fluctuators). I've said it before and I'll say it again. Headline CPI is useful for COLAs, since it reflects the actual difference in cost of living. But core CPI is the only thing that gives much indication of economic health. It becomes deflation when core CPI goes negative. Until then, it’s fluctuation in volatile items (note that core CPI excludes both food and energy, the two biggest fluctuators).

I’ve said it before and I’ll say it again. Headline CPI is useful for COLAs, since it reflects the actual difference in cost of living. But core CPI is the only thing that gives much indication of economic health.

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