Why the CPI Drop Doesn't Match Your Grocery Cart

Episode 114 of Inflation Explained with Fexingo. The June 2026 CPI report showed headline inflation easing to 3.5%, but the PCE price index rose again. Lucas and Luna drill into why the official CPI number feels disconnected from what households actually pay at the register. They break down the substitution bias in the CPI basket — how the government assumes you switch to cheaper items when prices rise, even if you don't. They walk through real examples: beef versus chicken, store brands versus name brands, and the quiet creep of 'quality adjustment' that can make a smaller, cheaper product look like a good deal in the data. The hosts also touch on how the Fed's preferred PCE index captures a wider range of spending but still misses the pain of everyday purchases. This episode gives you one concrete lens to interpret next month's inflation headline without feeling gaslit by the numbers. #CPI #PCE #Inflation #SubstitutionBias #QualityAdjustment #CostOfLiving #GroceryPrices #FedPolicy #Economics #ConsumerPrices #InflationExplained #FexingoBusiness #BusinessPodcast #LucasAndLuna #PriceIndex #RealEconomy #DataSkepticism #HouseholdFinance Keep every episode free: buymeacoffee.com/fexingo