Inflation Index Reform

Proposal for a New Purchasing Power Inflation Index


This proposal outlines the development of a new Purchasing Power Inflation Index (PPII) designed to provide a more comprehensive understanding of inflation's impact on consumers over the past 50 years. Unlike traditional inflation indices, the PPII will measure the real-world affordability of essential goods and services by calculating the number of work hours required at both median and minimum wage levels to purchase key items.

Key Components

The PPII will focus on the following essential goods and services:

  1. Housing: Average cost of home ownership and rent.

  2. Gasoline: Average price per gallon.

  3. Car Insurance: Average annual premium.

  4. Health Insurance: Average premium costs.

  5. College Tuition: Average annual tuition for public and private institutions.

  6. Food: Average cost of a basket of common groceries.


  1. Historical Price Data: Collect historical price data for each key item from reliable sources dating back 50 years.

  2. Wage Data: Gather median and minimum wage data for each year in the same period.

  3. Work Hours Calculation: Calculate the number of hours required to purchase each item for each year at median and minimum wage rates.

  4. Index Formation: Develop an index that tracks these work hour requirements over time, providing a clear picture of how affordability has evolved.


  • Affordability Insight: Provide a clear measure of how inflation affects the purchasing power of consumers.

  • Policy Guidance: Offer valuable insights for policymakers regarding wage adjustments and economic policies.

  • Public Awareness: Educate the public on the real impacts of inflation on their everyday lives.


  1. Enhanced Perspective: Unlike traditional indices that focus on price changes, the PPII highlights changes in consumer affordability, offering a more human-centric view of economic conditions.

  2. Comprehensive Analysis: By incorporating essential items and calculating required work hours, the PPII provides a more detailed and relevant analysis of economic pressures on different income groups.

  3. Historical Context: The 50-year scope allows for the identification of long-term trends and the assessment of the effectiveness of past economic policies.


  • Data Collection: Establish partnerships with governmental and academic institutions for accurate historical data.

  • Index Development: Utilize statistical and economic analysis expertise to construct and validate the PPII.

  • Publication: Release annual reports and interactive tools to disseminate findings to policymakers, researchers, and the general public.


The proposed Purchasing Power Inflation Index will serve as a crucial tool in understanding the true impact of inflation on consumers' lives. By measuring affordability in terms of work hours required at different wage levels, the PPII will offer valuable insights for policy development, economic research, and public awareness. This innovative approach will provide a more nuanced and practical perspective on inflation, enabling better decision-making for a more equitable economic future.

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