Slightly off topic but would you mind explaining GDP price index vs CPI? I was informed my “cost of living” raise will be 4.2% this year, which is better than any other year I’ve seen - but certainly not keeping up with actual cost of living, and when I asked where that number comes from I was shown in our contract that it’s essentially the gdp deflator. A cursory google result explained some differences between gdp price index and cpi but your explanations are always better.
CPI just measures price change for consumers and only tracks consumer goods.
The GDP price index tracks estimated costs for governments, businesses, and consumers, but does not track changes in import prices.
Essentially they are watering down your raise by letting government contracts (which are mostly fixed) hold down the averages despite consumer and business prices being up 8-13%.
I suspect your employment contract probably has a clause to base raises on either GDP price index or CPI, whichever is lower.
Slightly off topic but would you mind explaining GDP price index vs CPI? I was informed my “cost of living” raise will be 4.2% this year, which is better than any other year I’ve seen - but certainly not keeping up with actual cost of living, and when I asked where that number comes from I was shown in our contract that it’s essentially the gdp deflator. A cursory google result explained some differences between gdp price index and cpi but your explanations are always better.
CPI just measures price change for consumers and only tracks consumer goods.
The GDP price index tracks estimated costs for governments, businesses, and consumers, but does not track changes in import prices.
Essentially they are watering down your raise by letting government contracts (which are mostly fixed) hold down the averages despite consumer and business prices being up 8-13%.
I suspect your employment contract probably has a clause to base raises on either GDP price index or CPI, whichever is lower.
As always, thank you.