But in Queens, New York, on Friday, William Dudley was bombarded with questions about food inflation, and his attempt to put rising commodity prices into a broader economic context only made things worse.

"When was the last time, sir, that you went grocery shopping?" one audience member asked.

Dudley tried to explain how the Fed sees things: Yes, food prices may be rising, but at the same time, other prices are declining. The Fed looks at core inflation, which strips out volatile food and energy costs, to get a better sense of where inflation may actually be heading.

So, Dudley sought an everyday example of a price that is falling.

"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday.

"You have to look at the prices of all things," he said.

This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."

"I can't eat an iPad," another quipped.

But how often do you buy technology? A few purchases a year max I would say. Yet, it's being weighted in the CPI and fuel and food costs are left out, two of the most common purchases made every day or every week. Khross was right. This is all done to make the inflation rate look low. And on top of it, anything tied to the CPI, such as i-bonds are kept lower. This is insane. This would be like me setting my own credit card rate based on how quickly I think I'm paying the card off, but excluding my food and fuel costs.

Let's see... I pay monthly broadband and tv and for my cell phone which adds up to a lot. I recently bought a computer that cost over $4k, a new smart phone, monitor, etc.

I'm not interested in wild theories, nor am I trying to pick on you, Dave. I'm just wondering why those people (if you aren't one of them no problem) think it's okay to ignore that chunk of the economy. I've had the highest winter electric bill in three years in my apartment, and I watch food prices creep up. I'm not happy that the administration is singing "happy days are here again" when there is practical evidence to the contrary.

It seems to me that was explained in the OP. They remove them because they are volatile and likely artificially increase or decrease the overall trend. The Fed is generally interested in longer term planning, so it makes sense for why they remove it. If there are longer term food/gas issues, those will bleed into the rates of other goods as people are forced to change their spending habits.

Now, you can certainly disagree with their approach, but it seems pretty straightforward to me as to why they do it that way.

You assume that I agree with how they perform their review. All I'm saying is that their reasoning is pretty clear.

Thanks Khross, I've seen the light. I understand now that it's all a government conspiracy to dupe the American people and hold us all back from our individual greatness. How could I have been so blind...

Xequecal:

Actually, they are lying and saying that 20% is 1% ...