Individual Stocks

Inflation and the Consumer Price Index

How might the CPI be biased?

The CPI may be biased if the consumers who participate in the studies, in reaction to the changing price of one item, may substitute it for another item, or abruptly change their pattern of consumption. If this finding is extrapolated to millions of consumers, as more consumers move to purchase another substitute, it may increase the price of that substitute product in the short term.


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