Escobal, J. y Castillo, M. (1994). Sesgos en la medición de la inflación en contextos inflacionarios: el caso peruano (Documento de trabajo N° 21.). Lima: GRADE.

The possible overvaluation of the Consumer Price Index of Metropolitan Lima has been a problem that has been worrying academics, decision makers and public opinion in general for some time now.

Many are unaware that the overestimation of the Gross Domestic Product per capita and of the exchange rate lag, or the underestimation of the tax burden, has its origin in the same problem of measuring the CPI. However, the existence of such biases is increasingly recognized as issues that need to be urgently addressed and solved. Understanding the exact nature of these problems is indispensable if they are to be properly corrected.

This paper starts from the theory of cost of living indices to determine the most appropriate way to aggregate prices to obtain an inflation indicator. This methodology is compared with the CPI prepared by INEI. The paper shows that the INEI price index systematically overstates the cost of living in periods of high inflation. The correction of this bias is crucial because a rectification of the CPI would allow for a reassessment of the evolution, in real terms, of the main macroeconomic aggregates.