Wayne,
I believe that the CPI tries to capture present food (liveliehood in general) patterns. Substitution, however, does sound odd, as it is in some sense a loss of quality and hence inflationary, if improvement in quality is deflationary. So, I kind of agree with you there. Also, the 5th point regarding forward vs. bckground looking estimates is well made and taken. However, there are other forward looking estimates.
I have issues with the other points, as explained below. Rent is a cost, home prices are assets. If my asset value appreciates, my cost of living doesn't go up. Also, societal changes that alter needs (like alarms) are beyond the scope of CPI, which only attempts to quantify the cost of living after taking into account societal changes. As for public facilities, where I live such has improved majorly in the last 10 years (the period I have been in the USA). But even that is outside the realm of CPI.
-BGR. |
