Why is the consumer price index biased?

The Consumer Price Index (CPI) is often considered biased because it may not accurately reflect the true cost of living for all consumers. This bias can arise from factors such as substitution bias, where consumers switch to cheaper alternatives when prices rise, and quality adjustments, which may not fully account for improvements in product quality. Additionally, the CPI may not capture changes in consumer preferences or the introduction of new goods and services. These limitations can lead to an overestimation or underestimation of inflation rates, affecting economic policy and individual financial decisions.