The most-used measurement of inflation doesn’t use the most realistic data and fails to show that inflation has actually risen 1.3 times higher since 2001 than the consumer price index shows.

That’s the assertion of former U.S. Comptroller Gene Ludwig, who has come up with the Trust Living Cost, Bloomberg reports.

Ludwig argues the CPI — used by economists and policymakers for more than 100 years since its creation in 1921 — leaves out the real-world experience of working families.

Ludwig says the 80,000 items the CPI covers capture far more than the essentials, including categories irrelevant to lower- and middle-income households. Perhaps more importantly, it focuses on full-time, salaried workers while ignoring millions of part-timers and the underemployed.

To address those blind spots, the Ludwig Institute for Shared Economic Prosperity looks only at what a family must pay to cover life’s necessities. Thus, it includes housing, medical care, transportation, groceries, child care, clothing, personal hygiene, and modern communications technology such as smartphones and internet service.

By stripping the measurement down to these essentials, Ludwig says, the TLC provides a more honest reflection of what it takes for households to stay afloat.

The differences between the two measures are striking. Since 2001, the TLC has risen about 30% faster than the CPI. Housing illustrates the gap clearly: under the CPI’s methodology, which relies on owners’ equivalent rent — essentially homeowners’ estimates of what their properties could rent for — housing costs have increased 90% over two decades.

The TLC, using the Department of Housing and Urban Development’s fair market rent data, shows a stunning 131% surge in housing.

Medical care tells a similar story. Relying on private insurers’ medical reimbursements, CPI records a doubling in costs. The TLC, however, finds they have nearly tripled, largely due to soaring insurance premiums and out-of-pocket payments that families must shoulder directly.

Other essentials, such as groceries and child care, track more closely across both measures since they draw on similar data. Yet even here, the weight each index assigns can change the outcome.

Transportation is another area where methodology makes a difference, although here, the CPI shows a higher figure. It emphasizes gas and maintenance, while the TLC focuses on used cars.

These measurement choices have real consequences. According to CPI-adjusted figures, a two-parent household with two full-time median earners still managed a small surplus of $2,600 in 2023 after covering basic expenses.

But when Ludwig’s TLC is applied — and when part-time and underemployed workers are counted — the same household falls a whopping $11,766 short of meeting its annual needs. That shortfall has more than doubled since 2001, underscoring how far many families have fallen behind even in years when official statistics suggest stability.

Ludwig doesn’t believe the CPI should be scrapped altogether, as the backlog of data is important for historical comparisons. Instead, Ludwig insists that policymakers, businesses, and the public also need complementary measures like the TLC to understand the real pressures facing households.

“People can’t have their lives constantly going downhill in a society that is actually net getting wealthier,” says Ludwig, who was U.S. comptroller of the currency under President Bill Clinton.