Final answer:
The Consumer Price Index (CPI) is used to measure inflation but has issues, such as overstatement of inflation rates due to biases and not accounting for lower online prices.
Step-by-step explanation:
The Consumer Price Index (CPI) is the most commonly cited measure of inflation in the United States, recording the prices of goods and services purchased by the typical urban consumer. However, the CPI has known issues, leading to potential overstatement of inflation. Substitution bias and quality/new goods bias were notable problems but were somewhat mitigated by the early 2000s. Despite this improvement, it is estimated that the CPI still may overstate the true rise in inflation by about 0.5% per year. This seemingly small difference can compound over decades to a significant distortion. Additionally, the CPI has not historically adjusted for shifts to online retail, where prices can be lower than in physical locations.