Originally Posted By: Df
Commodities do not generally follow strict ecnonomic demand and supply curves, especially fuel and food. That is why they adjust inflation "after" fod and energy." People will cut back, but not eliminate its use all together.


I think what you meant to say was the demand curves for fuel and food are inelastic, meaning that even if their prices go way up, there is little change in demand. It's the same demand/supply curves, the demand curve is just very steep.

Contrary to what you might think, "semantics" can be very important in discussions about economics.

Fuel is typically left out of the price index because the inflation in oil is already reflected in the inflation of the goods that ARE used in the calculation. What their justification is for leaving food out of the cpi calculation, I can't tell you.
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