Inflation measures appear relatively simple; figure out the differences in the price of a bunch of different things and calculate an inflation rate from those price changes. This works out well when the product is the same over a period of time (Ex: A kilo of rice is the same in 1970 and 2013), but what about when the product changes over time?
Say we're using a Chevy Impala as part of the "basket of goods". A 2013 Impala is safer, more fuel efficient etc. than the 1970 model. The 1970 model would almost certainly be cheaper than the 2013 model if it were made today which would affect your end result when calculating inflation.
How do the people who do these statistics account for changes in technology when computing inflation?
Well inflation is our number one economic enemy and it makes things more expensive including in the technology sector. This cripples our ability to produce new technology. Inflation and our debt are the most and least important issues in politics.
