I just realized, why consumer price index cannot possibly work as a measurement of inflation.
By definition, it is based on price of goods, that an average person buys, and weighted by the ammount.
Well, if chocolate goes to doubble price in an year, so I decide to stop buying it, the change in it's price does not even affect the inflation numbers, since it is now weighted at 0. Same goes for housing and energy. If I cannot possibly ever afford a house, guess what? The weight variable will go to shit too.
They also do sketchy things like use 'substitute goods' so for instance if you used to eat 2lb of steak per week but now can only afford to eat 2lb of ground beef per week, they say 'still 2lb of beef, no change in cpi to see here'. They also cut out energy and housing costs as 'too volatile'. The whole thing is a crock because the fed is required to target 2% inflation, so the more they cook the cpi numbers the more the fed can inflate and still say 'see what a good job we did?'
@nicholas
So, I agree completely. It's a perfect tool to hide inflation, instead of actually calculating it.