Suppose a student spends 60 percent of their budget on education and communication and only seven percent on apparel, as compared to around seven percent and three percent, respectively, for a typical urban family of four (see Figure 19.7). If education and communication costs rise at twice the inflation rate in the US, and apparel costs do not rise as fast as the education costs, would the student experience a higher or lower inflation rate than the CPI suggests? Does the student gain or lose if their scholarship is adjusted using percentage change in the CPI?

Figure 19.7

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Other goods and services 3.2% Education and communication 6.6% Recreation 5.7% Medical care 8.7% Transportation 16.3% Apparel 3.0% Food and beverages 14.3% Housing 42.2%