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<blockquote data-quote="RobGMN" data-source="post: 8886043" data-attributes="member: 683408">The CPI doesn&#039;t ask people what they are buying (i.e. Smuckers vs Great Value), it&#039;s only looking at price movement.Are you saying the prices of goods haven&#039;t gone up over time since retailers started offering generic and cheaper substitutions?Your Mac and Cheese example shows the price of Mac N Cheese has gone up whether you buy generic or Kraft.If everyone in the US switched ONLY to buying generic/cheaper products today, their personal expenditure would drop. Let&#039;s say their expenses drop form $400/week to $350.The non-generic goods would no longer sell, and disappear from the shelves. They would also drop from the CPI calculation.This is a reasonable expectation, right?Fast forward three months, and the generic goods go up in price. Your weekly expense goes up to $375.Would you consider that a price increase because you are paying more, or consider it &quot;no change&quot; since you are still paying less that the original $400/week?Of COURSE you will say you are paying more per week, because you ARE. Changing your product choice didn&#039;t change the movement of the retail price, only your personal expense.Averaging prices does not account for which specific items people buy, nor should it.If only two cars exist, and one costs $15,000, and the other is $25,000, the average price of a car is $20,000It doesn&#039;t matter that they sold 5,000 of the cheap one and only 3,000 of the expensive one.It also doesn&#039;t matter if the following year 1,000 people switched over to the cheaper car. The average price is still $20,000.Substitution doesn&#039;t change that.</blockquote>

[QUOTE="RobGMN, post: 8886043, member: 683408"] The CPI doesn't ask people what they are buying (i.e. Smuckers vs Great Value), it's only looking at price movement. Are you saying the prices of goods haven't gone up over time since retailers started offering generic and cheaper substitutions? Your Mac and Cheese example shows the price of Mac N Cheese has gone up whether you buy generic or Kraft. If everyone in the US switched ONLY to buying generic/cheaper products today, their personal expenditure would drop. Let's say their expenses drop form $400/week to $350. The non-generic goods would no longer sell, and disappear from the shelves. They would also drop from the CPI calculation. This is a reasonable expectation, right? Fast forward three months, and the generic goods go up in price. Your weekly expense goes up to $375. Would you consider that a price increase because you are paying more, or consider it "no change" since you are still paying less that the original $400/week? Of COURSE you will say you are paying more per week, because you ARE. Changing your product choice didn't change the movement of the retail price, only your personal expense. Averaging prices does not account for which specific items people buy, nor should it. If only two cars exist, and one costs $15,000, and the other is $25,000, the average price of a car is $20,000 It doesn't matter that they sold 5,000 of the cheap one and only 3,000 of the expensive one. It also doesn't matter if the following year 1,000 people switched over to the cheaper car. The average price is still $20,000. Substitution doesn't change that. [/QUOTE]

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