The Chapwood Index is an advertising gimmick. It must get extreme results or it will be overlooked.
It is not possible to understand their methodology
Every six months, we take the precise price for the same item quarter by quarter and calculate the increase or decrease, then developed a weighted index based on price.
What are the weights? Surely not the guy's friends expenditure shares on these items!
The text at the link shows that these guys do not understand what a cost-of-living index is and do not know how to go about constructing one.
They criticize that the CPI contains too many prices! You can't have too many prices in a price index.
Once again: The published CPI describes the weighted average price faced by approximately the mean consumer. The weights are base period expenditure shares. For that person, the CPI
overstates inflation because the base weights ignore substitution in response to price change. [The Personal Consumption Expenditures price index is the current weighted version, and understates inflation, for consumers have already substituted away from more expensive stuff.] The truth lies somewhere in between.
Inflation facing each individual will be different from the CPI on account our expenditure shares are different. Individual category price increases for the CPI are published. One can then reweight them with one's own expenditure shares.
These guys don't know what they don't know.
