Should Inflation Rate Be Measured Differently?

Inflation Rate currently is measured based on Consumer Price Index:
- For consumers, it help us to understand how price is increasing.
- For policy makers, it support decision-making process, e.g interest rate.
- For producers, they can expect the production cost to increase, thus adjust their end prices.
,which is not necessary a bad thing, however, does not provide the overall truth.

First of all, let’s reason why an investment property increases in price. The most obvious reason is that it has higher value, or more precisely, people has just realised their higher potential:
- Real Estate increases in their price because the perception of owning a house is perceived as more valuable. For example, if a city rapidly invests in its infrastructure with more useful facilities are being built, the value of owning a house in that city will relatively increase.
- Same for stocks
- Gold, on the other hand, has its value increased when the posibility of being able to deliver today result for future use increases. (The amount of Gold for production is relatively insignificant)

Should we consider these increases “Inflation”? Probably not, because they are caused when demand exceeds supply. In the context of a true inflation, these demand-supply effects should be eliminated, which is very likely unrealistic. That means, the price increases only because there are more money in the market.

So the act of printing fresh money is the root cause of Inflation Rate, measuring its with a basket of consumer goods do not cover the whole picture. As money is only a medium of exchange, we must include all goods that could be involved in any kind of transaction, either in the form of buying a candy or investing in a stock.

TL&DR: Inflation Rate should include all form of properties involved in human transactional activities.