The chart below was constructed using data from FRED2. I took oil and gas prices, deflated each series by the official energy CPI, and marveled at the results.
Since 1994, gas prices have risen 2.8% per year faster than the energy CPI, and oil prices have risen 9.6% per year faster. Are gas and oil prices being hedonically “adjusted” (manipulated) downwards when incorporated into the energy CPI? Or are other components of the energy CPI deemed to be “better” each year, and thus deserving of hedonic adjustments? Electricity, perhaps?
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