Inflation is a serious impediment to efficient resource allocation and economic development.
Noted previously, Greenspan has said for a long time that the CPI was not truly reflecting the buying practices of the consumers. That's due to the fact that there are CPI adjustments for 47.8 million Social Security recipients, 4.1 military and civil service retirees, 2.4 million food stamp recipients and 26.7 million children who receive school lunches. CPI is an indicator of inflation on the retail level. It is based on the expenditures reported by almost all urban residents, including professional employees, the self-employed, the poor, the unemployed, and retired persons as well as urban wage earners and clerical workers. CPI is seasonally adjusted to cull apart the changes that are seasonal from the underlying economic changes.