>>720722946
CPI is a weighted average, so strong declines in non-essentials (like TVs, PCs, phones) can offset rises in essentials (like rent, food, energy).
That creates distortions:
Essentials dominate budgets. Housing and food are non-substitutable, so their increases hurt more, even if other goods get cheaper.
Electronics have steep hedonic deflation. CPI methods adjust for quality improvements, which often shows large price drops that few households can realistically use to “offset” higher rent or groceries.
Substitution effect. CPI assumes consumers substitute toward cheaper goods, but you cannot substitute away from shelter or staple food in the same way you can delay buying a new TV.
Because of this, CPI is a decent long-term inflation tracker but a weaker measure of current adequacy of purchasing power for basic living. Some countries therefore publish alternative indices (e.g., “core CPI,” “CPI for low-income households,” or “food and energy CPI”).
