Inflation and the CPI

Just a quick note springing from a discussion with elder relatives over Christmas.

CPI includes.... average basket of consumer goods, established and tracked by....

There is a valid instrument called "Core Inflation", this is essentially the CPI stripped of food and energy costs.  There are valid reasons for doing this, namely that energy and food prices may be wildly influenced by factors other than MS/inflation, and if you are looking for inflation, you don't want to be distracted by irrelevant factors.

However, lately "core inflation" has been used as if that is actually the price increase faced by the common Joe.  Not so.  See, not only does the average Joe buy food and energy (gasoline, electricity, propane, etc...), so Core Inflation doesn't show the whole picture, but also the CPI itself assumes you buy average goods.  So if you buy the average amount of a new house, the average amount of vacation, the average amount of a new car, the fact that prices in those three areas have continued to be remarkably low will hold down the average increase of prices you face.  But, if you do not buy a house, do not buy a new car, and have to reduce or eliminate your vacation, you only get to enjoy the increasing prices of food, energy, clothing, entertainment, etc....

So, in summary, the CPI is pretty good at measuring inflation (a topic for a different day), but not especially good at revealing "sticker shock" faced by the the consumer that doesn't buy certain large, key, goods in a particular year.  "Core Inflation" is a real tool, and very valid, but absolutely misleading and even harmful when looking at whether prices faced day-to-day by the average Joe.

How would I change this?  I would have a third way of looking at the CPI.  In addition to having the whole CPI and Core Inflation, we should also be able to split the CPI into three parts (looking at price change across the entire CPI, or each individually) of Essential Goods (food, energy, clothing, entertainment), Luxury Goods (furs, vacations, jewelry), and Durable Goods (investment goods, housing, transportation).