Part 5/8:
Measuring inflation involves assessing the Consumer Price Index (CPI), which reflects the prices of items that affect daily living rather than financial assets like gold and stocks. This exclusion is crucial; while financial asset performance mimics inflation, they cause little direct impact on typical consumer budgets. Thus, food and energy prices— fundamental to human survival—are part of the CPI, but high volatility sometimes leads policymakers to favor a version without these essentials.