Thank you. I appreciate that question.
This business of measuring inflation is actually, as you've hinted, much harder than it looks. Probably every one of us has our own personal inflation experience. The reason that's different from person to person is that our spending patterns differ quite a lot by age group or by region, or what have you.
We begin there and ask ourselves what's the simplest and most intuitive way of coming up with something that works pretty well. I think that's a pretty good description of the CPI.
The CPI takes your typical household basket, takes a reference year and says in that year households spent 2% of their money on this, 4% on that, on all these items and so on. Then, of course, it tracks the sale prices of each of those items and then takes a weighted average of all of those things, builds it into an index and asks how much it went up since the last time we looked at ti. That's our measure of inflation.
That's complicated enough, but economists can always complicate something further. There are many other more sophisticated ways of doing this, but the good news for us is that we don't need to go into them because they result in little differences here and there at certain times, but on average they all tell us roughly the same thing. That's what makes the CPI very attractive because regular folks understand what it is. They understand when they're buying the milk that it's going into the CPI and it's recognizable. If we say that's the thing we're going to target, they understand that and it anchors their expectations. That's the combination we're looking for.