The CPI isn’t a perfect gauge of the overall economy. That’s because it has limitations in application and measurement.
First, the CPI focuses on urban consumers. That means it may not represent consumer spending in rural areas.
Second, the CPI is subject to sampling errors. Results may be different from actual records of consumer retail purchases. It only tracks the prices of a basket of goods and services, including commonly purchased items in urban areas. It doesn’t cover all products and services.
Third, there may be bias causing the overstating or understating of CPI. This could lead to the overstating or understating of the inflation rate. Consumers may also respond to price changes by changing their spending habits. This may not be fully reflected in the CPI.