Income-Group Specific Trends in CPI Inflation

Tyler Cowen points out in a blog post that price increases adjusted for changes in quality have differed substantially across product categories. Depending on the basket of goods and services one wishes to consider this gives rise to large differences in measured CPI inflation. Cowen suggests that low-income households experienced much stronger CPI increases for their relevant basket than high-income households. In other words, the commonly reported increase in income inequality severely underestimates the effective rise.