Sept. 28, 1996 The Consumer Price Index is a measure of the
prices of a fixed market basket of some 300 consumer goods and
services purchased by a "typical" urban consumer. The 1982-1984
period serves as the base period so analysts can compare other
year's changes with this base period. The composition of the
market basket is fixed in the base period and is assumed not to
change from one period to another. The reason for the assumption
is because the CPI measures the costliness of a constant
standard of living. Critics claim that the CPI is inaccurate
because it overstates the increases in the cost of living. For
this reason, the CPI has been said to be inaccurate. First,
consumers do change their spending patterns. Even though the
composition off the market basket is assumed not to change, it
does because consumers change their spending patterns. Because
consumers substitute lower priced products in lieu of higher
priced ones, the weight has shifted. The CPI assumes that this
does not occur and therefore it