CPI is Junk
Governments with instable currencies frequently manipulate and distort the official CPI data. In high-inflation economies, surveys are outdated; price baskets are not reflective of real consumption patterns, and reporting is politically motivated. My methodology of calculating daily implied inflation uses the black-market FX rate and a stable reference currency (the US dollar). This methodology reflects real-time inflation and avoids the distortions the official CPI is susceptible to.
Purchasing Power Parity is the foundation of my real-time inflation calculation methodology. PPP affirms that changes in a country’s exchange rate reflect changes in the domestic price level. In countries that experience monetary instability, the black-market FX rate becomes the true anchor of value, especially because official exchange rates are often artificially set by the government and are not reflective of true market value of the currency. My methodology also helps explain extreme movements in exchange rates, making it useful for my work on Commodities Trading and Depreciation, where currency collapses are a key driver of price behavior. Similarly, PPP clarifies why countries experiencing hyperinflation must adopt reforms like Dollarization or Currency Boards, both of which anchor the monetary system to an external standard.