Many programs and benefits are tied to the Consumer Price Index, CPI, such as Social Security, school lunch programs and even our federal tax rate. The CPI is related to millions of workers benefits in many sectors and if this data is incorrect or miscalculated it would effect millions of families.
With so much being directly tied to the CPI, any problem in the data could have negative effects on the recipients of the benefits linked to the CPI data. These problems in the data would need to be accounted for in future adjustments. According to the textbook the problems which arise in the CPI are substitution bias, the introduction of new goods, and unmeasured quality change.
I live in Salida and the cost of living here is high when compared to some areas with real estate contributing the most. Home prices have steadily increased the past decade and increasingly is becoming more difficult for local workers to afford. Gas is higher here then in the metro areas and groceries are especially expensive now during this pandemic.
Social Security is vital to millions of retirees and many people are on fixed incomes. If the amount of money they receive doesn't match with the cost they are experiencing then inflation is negatively affecting their ability to pay for necessities. With school lunch programs being tied to the CPI, poorer and lower middle class people will be affected by the CPI more than people not reliant on government programs. Veterans and public sector workers are also affected by the CPI and the changes to it and the rate of inflation. Upper middle class and upper class workers less reliant on government programs and privately employed would feel the effects of changes to the CPI the least.
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