CPI is a good method to measure inflation, but it's managed by people who have an interest in getting a low number, so it is a poor measure in practice.

> right, so CPI is not a good measure for actual inflation

No, quite the opposite in fact. CPI is a accurate measure of inflation as it tracks how much the real-world consumer prices vary where it really matters: real-world consumer expenses.

Perhaps the mistake you're making is assuming wrongly that demand for specific brands/makes/models is perfectly inelastic and consumers do not change their consumption patterns at all even if their price increases so much that they can no longer afford them. Meanwhile, if a low/middle class family sees the price of stake skyrocket, you can bet they'll start to switch a few meals to hamburguers or hotdogs.

The argument is that there is no inflation if people can't afford stuff, because they'll just be priced out and forced to not buy stuff anymore, thus their expenses will be stable. Duh. Inflation is not how much money people spend, inflation is ever increasing prices leading to people affording less and less stuff with their rapidly depreciating money.

If inflation happens and food becomes more expensive and you keep buying the same food you have less money left over for non food products. The CPI will adjust and weight your food expenses more which will raise the CPI much faster than if it also looked at fitness equipment that went down in price because you didn't buy it because food was too expensive.

If food gets more expensive and people don't spend more on food then inflation didn't happen by definition. They still spend the exact same amount after all, they just got different food instead.

By that definition inflation basically never happens until people get higher wages so they have more to spend.

That’s clearly absurd, and so defining inflation in a way that means it never happens when people substitute goods is also clearly absurd.

That is exactly how the ruling class sees the situation. Gallon of milk $10? Chump change, maybe once it hits $100 it will make for a bit of faux concern table chatter at our $10k/seat fundraising dinner next week. The plebes agitating for $15/hour? Catastrophe.

If inflation means measuring value of money over time, substitution is not correct. You could substitute before - you just didnt, because it was not necessary. With a measure you describe we can slide into poverty and it doesnt show.