Manipulation is the name of the game, but it is NOT a one-party trick. Clinton used it; so does GWB. And one of the worst is the Fed, whose former chair, Greenspan, was a master.
Start with the inherent bias built into the BLS models, and their tendency to understate inflation. Next, add a sprinkle of substitutions, quality improvements, and hedonic adjustments, all of which rationalize price increases as somehow non-inflationary.
Then, we have the Fed's focus on core inflation, which tends to ignore the non core items like Food and Energy (besides, who really needs Food and Energy anyway?). A variation on Core Inflation is Wall Street's love affair with Inflation -ex-inflation, which is a basket of only those goods and services that have not gone up in price.
Finally, the latet inflation innovation is a new concept I call Uni-directional Inflation, which states that when certain items (e.g., Oil, Corn, Copper) go up in price, it is not inflationary -- but when those same items drop in price, its proof positive that inflation has been vanquished.
The BushBots will get into examining these, ah, statistics when The Hildebeeste assumes power.
On "Substitution":
When someone buys Chicken instead of Steak because meat has gone up in price, that's evidence of inflation. The substitution process fraudulently rationalizes this to eliminate inflation from the BLS basket. Indeed, substitution is PROOF of inflation. When a product's price rises out of a consumers ability to afford purchasing it, its prima facie evidence of inflation. Only the starry eyed residents of ivory towers can say with a straight face that cheaper substitutes are non-inflationary.
On "Hedonics" (flogged by Greenspan):
Hedonics asks the question: "How much of product's price increase is a function of "inflation," and how much is a quality improvement?" Thus, the entire late 1990s concept of Hedonics is premised upon a flawed assumption: that Quality is static.
In reality, all products incrementally improve over time. Indeed, it is the very nature of all technology -- from fire to the wheel to the iPod -- that they become better/faster/cheaper/feature-laden over time.
Hedonics are the bastard stepchild of flawed assumptions and abstract theory. To call it dishonest serves only to slander liars. Consider:
"Hedonics opens the door to producing magical results: a lower inflation rate with generally rising prices, a higher growth rate although the economy may be weaker, and a higher productivity number, although productivity would have been declining without the hedonic imputations." --The Illusions of Hedonics
But hey! Keep thinking that the rate is only about 2.5 or 3.0%.
Just don't eat a lot of steak, buy gasoline, or notice the price of copper (or gold).
HT: The Big Picture
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