The federal government tells us we’re not facing widespread inflation. Amity Shlaes examines that claim in her latest column for National Review Online.

All the official numbers, especially the Consumer Price Index, say that inflation is reasonable. Economists you respect tell you the wages are low because of “misallocation of resources.” Janet Yellen, the new Fed chairman, says she’s not worried. Maybe she will have a good vacation.

But other numbers suggest that inflation is higher than what the official data suggest. One set, from which some of the price bites above were taken, is here. For a more thorough review of why official numbers err, have a look at the work of John Williams, a consultant who has tracked data over the years.

Boiled down, Williams’s contention is that several alterations in the way we measure inflation have caused distortion. The Consumer Price Index used to be simple: The government measured the same basket of goods every year. If the price went up, the index captured that. Decades ago, authorities pointed out that people substitute a cheaper item when what they originally bought was too expensive. They altered the index to capture substitution. If steak is expensive, you buy chicken. The result of their fiddle is that inflation looks lower than it would otherwise. That’s disappointing. No vacation is a true vacation without a really good tenderloin.

The Bureau of Labor Statistics or the Fed also argued that the quality of some items (camera, movie) had improved over the years. The technology it took to make X-Men: Days of Future Past is leagues ahead of the technology used for Gladiator. The movie theater itself has better seats. Therefore, the ticket price should be higher. The economists at the BLS say they discount for that: “The hedonic quality adjustment method removes any price differential attributed to change in quality,” they write. But perhaps they use such indexes to hide true price increases. …

… [W]hat monetary authorities don’t recognize is that too much change in money’s value, up or down, can be enervating to the average person. An old money that keeps its old value sustains a mood of trust in society. This summer Jerry Jordan, the former president of the Cleveland Fed, penned a blistering notice of the change in central-banking culture on his website, Sound Money Project: “Clearly I was wrong a few years ago when I asserted ‘there were no central bankers or ministers of finance who would publicly argue that the prevailing inflation rate was too low.’ It now seems they all do.”