Puerto Rico Economic Pulse ©

February 1998: Inflation:

What is your Wallet Really Worth?

Every day your dollar is worth less. According to the consumer price index (CPI), Puerto Rico faces an inflation rate of almost 5.5% in 1998. This contrasts with the low 2% inflation in the US. If we cannot blame the US for our price increases, where does our inflation come from? This issue looks at the components and statistical measures of the CPI for answers.  Comparisons with the US and other countries will highlight big differences in the housing, education, and food categories.  Consumption patterns of 1977 indicate 41% was spent on food in PR. The US spends 16.3% while Greece spends 36.7%.  As a result, alternative measures of inflation have been suggested.  This issue evaluates and concludes which is the better way to measure inflation.