There are a lot of ways to define “inflation.” There are a lot of ways to measure “inflation.”
Economists, the Fed, and Wall Street define “inflation” to apply only to consumption goods, things we actually use and consume. Hence the name “Consumer Price Index.” The purpose of the CPI was never really to measure “inflation” however. Its purpose was to index government benefits and contracts. In the good old days, when people got cost of living increases in their paychecks, businesses also used it also to index wages. Younger workers today don't know what that means. It's ancient history.
The price of the roof over our head doesn't count as a consumption good. When skyrocketing house prices caused government indexed pay and benefits to rise too fast in the late 1970s, the BLS stopped counting housing prices in 1982, coming up with the excuse that houses were not consumption goods.
Since then the BLS and the Fed considered housing an asset, and replaced house prices in the CPI with the made-up Owner's Equivalent Rent (OER). That bogus stat is suppressed by a method which ends up with rent increases mimicking CPI in a circular process. So rents in CPI never rise at the actual rate at which they are rising in the marketplace. And the OER never comes close to the rate at which house prices are rising.
Economists don't think that inflation is applicable to assets. Assets don't “inflate.” They “appreciate.” So while “inflation” makes us mad when we go to the supermarket, we appreciate “appreciation.” Maybe not so much if we're on the outside looking in, but if we own a house, hey! It's all good!
As for the CPI measuring monetary inflation, which in recent years has been expressed ONLY in asset prices, like your house, that was never its intention.
The CPI does not measure the impact of monetary inflation. House prices do. Stock prices do. But not consumer prices. House prices rising 6% per year don't count in “inflation.” Neither did the skyrocketing prices of stocks in recent years. In this case, too much money did not inflate the prices of consumer goods, because the money wasn't going into consumers pockets. The “too much money” inflated stock prices. It inflated bond prices. It inflated house prices, because it went into the pockets of the people who had access to the printed money. That didn't include the bulk of middle class consumers and everybody else with lower incomes. That fact has enabled economists to ignore inflation, or worse, think that it's too low, and that the Fed just needs to print more money.
