Wrong! - Can a family in a developing country spend a larger share of its budget on food without spending more money on food than a family in an advanced economy? Can we compare inflation rates in developing countries and advanced economies? Is the CPI in developing countries inaccurate?
That's Right! - The Consumer Price Index basket consists of goods and services, each weighted by its relative size in an average consumer’s budget.
An average household in a developing country spends a greater percentage of its budget on food than the average household in an advanced economy, so the weight of food is greater in the CPI basket of developing countries than in advanced economies.
Rising food prices are a particular concern for central banks in developing countries, where food makes up a larger share of household budgets. —ft.com