First, there is no objective way to determine the relevant basket of goods, and different choices yield wildly different numbers.
The basket used is based on a representation of what people are currently consuming. This means we don't have to second-guess people's preferences. Unique goods like houses pose a problem, but there's not really anything we can do about that, so the normal process is to take an average of existing houses.
Second, the set of goods and services available in different times and places is always different, and perfect equivalents are normally not available, so different baskets must be used.
Which is a well understood problem. Every economist knows this, but what would you have us do? It is necessary to inflation-adjust certain statistics, and if the choice is between doing it badly and not doing it at all, then we'll do it badly. Just because we don't preface every sentence with this fact doesn't mean we're not aware of it.
Just to avoid confusion among readers, I want to distance myself from part of Vladimir_M's position. While I agree with many of the points he's made, I don't go so far as to say that CPI is a fundamentally flawed concept, and I agree with you that we have to pick some measure and go with it; and that the use of it does not require its caveats to be restated each time.
However, I do think that, for the specific purpose that it is used, it is horribly flawed in noticeable, fixable ways, and that economists don't make these changes because of lost purpose syn...
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