"The consumer price index is inherently a recursive function. If the price of ribeye steak goes up and consumers shift to lower cost ground beef in response, then the basket of goods that the consumer price index is calculated from adjusts down to that new baseline. If ground beef gets too expensive and consumers shift to lower-cost poultry, then the basket of goods will be adjusted again. If poultry gets too expensive and consumers shift toward more rice and beans, then the basket of goods will be adjusted again. If butter from grass-fed cows gets too expensive and people shift toward industrially-produced soybean oil, then the basket of goods adjusts to that. Thus, highly-priced goods and services tend to filter themselves out of the basket, and low-priced goods and services tend to be emphasized."
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