Most studies indicate that the CPI overstates increases in the cost of living by 0.5 to 2 percentage points each year.

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Many economists and researchers believe that the CPI overestimates inflation due to several factors such as the substitution bias, quality bias, and new product bias. This overestimation typically ranges from 0.5 to 2 percentage points per year, as reported by various studies.

Most Studies Indicate That the CPI Overstates Increases in the Cost