I would say that even 5% inflation would be vastly exaggerated. Historically inflation has averaged ~3% and that counts higher then average inflation during the oil crisis.
Over most standardized measures of time, the stock market has outpaced inflation by roughly 7% per year. In other words you would grow your purchasing power by as much every year (on average).
In order to have produced these kinds of results you would have needed to invest in a very broad range of investments
1-3% is government propaganda. 5-10% more accurately reflects everyday consumers. This would negate most stock market profits.
You need to investigate those numbers more thoroughly and see how changes in the way CPI is calculated understate inflation:
- the method of weighting the underlying components was changed from a straight arithmetic weighting method to geometric. The primary result of the switch to a geometric weighting was a
lower weighting to CPI components that were rising in price, and a
higher weighting to those items dropping in price which led to
lower reported inflation. - The BLS instituted a system of hedonic adjustments. Hedonics adjusts the prices of goods for the increased pleasure the consumer derives from them. This allows them to offset the price increases because the newer products or services are "superior" to the old ones.
- When a commodity, like gasoline, goes through periods of violent price swings the BLS steps in and uses
intervention analysis to
smooth out the volatility. As a result, sharply rising gasoline prices are never fully reflected in the reported headline inflation number.
However, declining prices, which are never adjusted, do show an impact to reducing inflation.Here is a link where they attempt to address some of the criticisms :
http://www.bls.gov/opub/mlr/2008/article/addressing-misconceptions-about-the-consumer-price-index.htmAny critical thinker can quickly see that there is manipulation being done when reviewing the facts.