Encyclopedia of Opinion
Question
Is inflation understated?
Position1 of 3›

No, inflation is overstated

This position holds that, far from being understated, inflation is overstated. It argues that measurement biases inflate the figure — improvements in product quality, shifts in what is relevant to the CPI, and a 'fixed basket' that no longer reflects what people actually buy.

Supporting arguments · 3

  1. A 'theoretical fixed basket' doesn't reflect what people buy
    When prices rise, consumers buy cheaper goods rather than higher priced goods.
  2. Rise in quality causes inflation to be overstated
    Quality improves over time, and adjusting for quality means consumers get more for less.
  3. Shift in what is relevant to the CPI
    Technological change means that many things we used to pay for are now free.