I'm not sure what you are getting at but this is a definition issue more than anything else. You either do or you don't include real estate in inflation and if you don't then you can't suddenly add them in later on, then you'd have to re-compute that number all the way back and then you can't really call it inflation any more without all kinds of footnotes about whether you mean inflation v1.0 or v2.0. I agree with you that it would have been better if it was part of it from day #1, if only because the cost of housing is a massive factor in the cost of living.
That's a result of an increase in demand and a very strong shortage of supply, which is related to inflation but not quite equivalent. Houses, as a store of value have substantial differences compared to the rest of the items that go into the inflation calculation, and don't get 'consumed' in the same way that say a bag of potatoes would be.
I don't necessarily agree that the price of houses shouldn't be in inflation, but it is there by proxy and the calculations do make some sense:
Ah, I spot a familiar pattern here: the layman definition of a term, which has all of the political power, has diverged from the academic definition, which is completely powerless.
The layman definition of inflation is "everything got more expensive". The academic definition seems to be "things got more expensive, but only if there isn't a shortage of that thing or too much demand(?)".
I think the layman definition is more logical, because shortages and demand are solvable if there's enough monetary inventive, which is ultimately accounted for in, you guessed it, the final price.
