Inflation

There are many measures of inflation. For example, different price indices can be used to measure changes in prices that affect different people. Though there are many measures of inflation, none provides a truly reliable gauge of inflation at any specific time. Inflation is measured by calculating the percentage rate of change of a price index, which is called the inflation rate. This rate can be calculated for many different price indices:
Consumer price indices (CPIs) measure the price of a selection of goods purchased by a "typical consumer." One problem with the CPI is that the weight attached to each class of goods and services is held constant for years at a time. Therefore, when consumers lower their cost of living by buying more items whose relative price has fallen and fewer items whose relative price has risen, the CPI will not show a decline in the cost of living. …