Are Smartphones 14% Less Expensive This Year?
Forgive me for neglecting to include examples of hedonics in my CPI rant last evening. One of my favorite such examples is the CPI category “smartphones” (see table HERE).
The BLS would have us believe that “smartphones” as a category experienced a 14.3% price decline from May 2024 to May 2025. How could smartphones in the aggregate be priced 14% lower this year versus a year ago? Answer: Hedonics.
The BLS believes phone buyers are getting incremental value from new smartphones in May 2025 versus May 2024 that exceeds the sticker price increase. Therefore, prices have come down to the BLS’ way of thinking. The hedonics methodology is fraudulent in my view. Be your own judge. Read about hedonics HERE.
Why would the BLS simply not compare apples to apples pricing across “like for like” products to give us a true “CPI” price comparison? The answer is that Social Security payments and related Federal Government outlays are pegged to CPI. Thus, the Federal Government has every incentive to manufacture a CPI figure that is lower than actual real world price increases to avoid a spike in the level of outbound Social Security payments and the like. CPI serves as a budget control measure.
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