Many writers have claimed that inflation is worse than the government statistics indicate. I don’t buy it, though the Consumer Price Index is not highly precise.

Let’s start with some good news. Plenty of prices of have declined over the past year. Here are some examples:

Furniture, -3.6 percent

Major appliances, -6.6 percent

Men’s shirts and sweaters, -5.7 percent

New cars, -0.4 percent

Televisions, -14.2 percent

Toys, -6.8 percent

Personal computers, -6.9 percent

Airline fares, -2.7 percent

Wow! That’s a long list of falling prices. Not all news is so good, though, as we’ve seen rapidly increasing prices for a number of goods, including women’s coats, children’s shoes, prescription drugs, college textbooks and cigarettes. (The data come from the U.S. Bureau of Labor Statistics’ Consumer Price Index release.)

A healthy economy always has changing prices, reflecting changing consumer tastes, incomes and changing costs of production. All of those things that influence textbook supply and demand can change from month to month, and prices change accordingly.

Some prices are prone to cycles, including energy. Many of the people who despaired over inflation cited rising gasoline prices. Two years ago regular gasoline was rising by six percent, which was a lot higher than reported inflation. However, in the past year gas prices have dropped by two percent, and that doesn’t count this month’s falling prices. (I can’t wait to fill my tank now.)

Food prices went up over the past years, and that’s a good illustration of why we economists often look at inflation excluding food prices. The 2012 drought caused grain prices to rise. Farmers decided to sell their livestock rather than feeding critters, so the price of meat fell. Now, two years later, the world’s farmers have reacted to high grain prices by planting a lot more corn. Grain prices have collapsed, but now meat prices have increased. Thinning the herd in the drought reduced meat supply in later years. Animal feed is cheap, so producers are more inclined to keep their cattle and fatten them up a little more. In the last CPI report, flour and rice were cheaper but meat was more expensive. None of these price changes are about excess money supply growth—they are all about farmers and consumers reacting to a weather cycle.

Some inflation worriers criticize changing the market basket that is sampled by government statisticians. The personal consumption price index, which is the Federal Reserve’s preferred measure, changes the market basket regularly; the CPI changes it every few years. Here’s why they do it. My first personal computer, an IBM PCjr, cost over $2,000 in 1984 (with added memory, a monitor and printer.) Very few people had computers, so it wasn’t even a part of the CPI calculation back then. Now, however, computers of various kinds are so common that they absolutely must be taken into consideration. That means that the market basket of prices used to calculate the CPI must change periodically.

Another part of the CPI that has created confusion is hedonic adjustment. I’m looking at an advertisement for a television set for $249. Is it comparable to the set that was sold a year or two ago? This one is a 32-inch LED. A few years ago, $249 would not have bought you a 32-inch television; you might have spent that much for a 24-inch set. So, have TV prices been unchanged? Our government statisticians say that if you get more TV for the same amount of money, that’s like a price decrease. They estimate the value of changed characteristics to come up with an estimate of the price of a constant-size, constant-quality TV. (“Hedonic” refers to pleasure, so the statisticians are trying to figure out what characteristics please us, and by how much.)

The CPI is not perfect. It’s based on a sample of prices, so there’s some inherent error. Not all products are covered, which is a particular problem with things like the personal computer, which were added to market basket after their prices had fallen enough to become common. That initial price decline was never measured. More generally, it’s hard for the statisticians to keep up with all the change going on. Is an old style shirt with a different fabric the same old product, a new and improved product, or an inferior product? Sometimes it’s hard to tell. Houses are a particular challenge. Did I buy my house as shelter or as an investment? The answer varies from homeowner to homeowner. We certainly don’t want to say that inflation increased because people’s investments went up, but neither do we want to ignore changes in the cost of shelter.

The CPI rose 1.7 percent over the past 12 months. Maybe true inflation was a little bit more, or a little bit less, but certainly we are not experiencing high inflation across the board.