Final answer:
The mitigation of substitution bias and quality/new goods bias is not a current problem of CPI, but its reliance on physical store data without adequate online price inclusion is.
Step-by-step explanation:
One assumption that is NOT a problem related to using the Consumer Price Index (CPI) to accurately state the rate of inflation is the adjustment for substitution bias and quality/new goods bias. These issues were significantly mitigated by the early 2000s, meaning that the CPI now overstates the true rise in inflation by a smaller margin—approximately 0.5% per year.
Although this discrepancy might seem minor, over the long term (a decade or two), this small percentage can compound and lead to a more substantial overstatement of inflation. An assumption that became a problem is the CPI's reliance on prices from physical locations, failing to account for potentially lower prices found online, such as on Amazon. This discrepancy can impact the accuracy of the CPI since a growing number of consumers shop online.