For most indexes in the Consumer Price Index (CPI), the Bureau of Labor Statistics (BLS) uses a form of the matched-model approach. It has long been recognized that the matched-model method can underestimate quality improvement, and therefore overestimate price inflation, for products exhibiting...

In this paper we provide new and detailed evidence on the impact on the U.S. CPI of the appearance and growth of new types of product outlets. Using actual CPI microdata for 2002-2007, we find that the changing mix of outlets had a statistically significantly negative impact on average prices in...