Question

 For many people a rise in the CPI is not an accurate measure of how much their cost of living has increased. What about a nonsmoking vegetarian who walks to work, for example? Why might the CPI not be applicable to this person?

Answer 1

Yes it is totally true that CPI has many limitations and according to given situation that it it does not measured how much the cost of living has increased is generally called as representation of novelty which means it only includes the already included product in the marke basket.

Fixed number of goods and services have already included in that market basket and it takes time say a year to add new product.

But it does not represents the actual cost of living.

In second case, the non smoking vegetarian will not included under the market basket of good and this is called as substitution bias

In this case ,the already existed product substitution is not included in the market basket and does not help in finding the exact value of CPI

Non smoking vegetarian wants to work but it is not included in that

Hence it will be not applicable to that person