True. That is why a new basket is compiled. In South Africa it used to be every 5 years. The improvements in quality is not captured during those years.
This is not how measuring inflation works. The CPI does not measure the same basket of goods, it measures a changing basket of goods. For example, if the price of hamburger goes up, according to CPI the increase in price is discounted because it's assumed more of cheaper items, say hot dogs, and less hamburger is consumed, therefore understating inflation. The CPI, therefore, is more a measure of survival costs than inflation. Also, phones improve but stay the same price, CPI says phones cheaper
True. That is why a new basket is compiled. In South Africa it used to be every 5 years. The improvements in quality is not captured during those years.
lostmy1 1 month ago
This is not how measuring inflation works. The CPI does not measure the same basket of goods, it measures a changing basket of goods. For example, if the price of hamburger goes up, according to CPI the increase in price is discounted because it's assumed more of cheaper items, say hot dogs, and less hamburger is consumed, therefore understating inflation. The CPI, therefore, is more a measure of survival costs than inflation. Also, phones improve but stay the same price, CPI says phones cheaper
thesilverjournal 1 month ago
Thank you, this helped a lot.
meudeus110 1 month ago