How accurate is the CPI basket of goods? Governments build it from household-spending surveys, weight each item’s importance, and track price changes to gauge inflation. But it can lag behind real habits, miss quality shifts, and suffer sampling errors. Different families feel inflation differently, so CPI can over- or understate true costs. Alternatives like chained CPI and the PCE index aim to reflect everyday price changes more precisely.
How Accurate Is The CPI Basket Of Goods? – Inflation Insight Channel
