> Don't average people buy houses? It's a bit of an artificial distinction to exclude them. When an average person buys a house and lives in it for a decade, t

> Don't average people buy houses? It's a bit of an artificial distinction to exclude them. When an average person buys a house and lives in it for a decade, they still have the house. Inflation is defined by consumption expenditures. I buy food, eat it, and no longer have that food to sell. I pay the power bill, having consumed power that cannot be resold. The consumed portion of housing is rent. And that is included in price indices; statistical agencies have to go to the trouble of modelling an owner-equivalent for owner-occupied housing. If you're still concerned about the technical definitions of what goes into a consumer price index, then you have plenty of others to choose from. The GDP deflator (a price index based on everything produced in the economy) shows trends very similar to the consumer price index over the medium-term. > Inflation is also defined as expansion of the money supply (monetary inflation), And those two concepts are not in fact equivalent. Going from an observed change in the money supply to changes in prices requires more intricate assumptions about how the economy works. The same money-supply increase can cause an increase in price levels in one country (say Venezuela) rather than another (the United States) depending on beliefs about permanence and the background state of the economy.