The Economic Perspective: “Inflation and Product Quality”

Mary:    I’m Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at inflation and product quality.  Mike, although the reported inflation rate has recently been very low, many people are suspicious of this number.  They wonder if all products and services are included in the measure, and they also hear about things like “hedonic adjustments” to prices.  Should we trust the reported inflation numbers?

 

Mike: Summary Answer

  • Yes
  • Numerous measures, but most include all products and services
  • Hedonic adjustments is just a fancy term for adjusting for improvements
  • In tracking price of vehicles, don’t want to count new safety or GPS features as inflation
  • Also, government inflation numbers are backed up by private estimates
  • I’m MW

 

Mary: And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.