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Added source from Consumer price index (merging)
The CPI may overestimate the inflation rate, primarily due to its inflexible dependency on the base year market basket. If the price of concert tickets goes up considerably, you might substitute movies for concerts. Since the CPI relies on a fixed market basket, such substitutions for less expensive goods and services are not accounted for in its measure of inflation. Quality improvements and price changes in new products that were not in the base year basket are also excluded from CPI inflation estimates.
The CPI may overestimate the inflation rate, primarily due to its inflexible dependency on the base year market basket. If the price of concert tickets goes up considerably, you might substitute movies for concerts. Since the CPI relies on a fixed market basket, such substitutions for less expensive goods and services are not accounted for in its measure of inflation. Quality improvements and price changes in new products that were not in the base year basket are also excluded from CPI inflation estimates.
== Sources ==
http://usinfo.state.gov/products/pubs/oecon/chap12.htm
== See Also ==
== See Also ==
[[Gross Domestic Product Deflator]]
[[Gross Domestic Product Deflator]]