It's a good question, I haven't read the book, but, I would like to mention a few points on measuring inflation. We tend to assume that the official rate of inflation must be correct, but, actually there is a lot of debate about the calculation of inflation. It is also interesting you mention that inflation is overestimated, many suggest inflation is underestimated.
Hedonics and InflationIn the US, the BLS, used hedonics to calculate inflation. What this means is that they take into account changes in product quality.For example, the top of the range quality computer may increase in price from $700 to $750. (e.g. top of the range Apple Macs seem to get a little more expensive, but with much better features) But, because the new computer is twice as powerfu, the BLS works out that the price of computers has fallen, even though the top of the range computers may be getting a little more expensive. Maybe the same thing happens with cars; Ford bring out the latest model, which is 10% more expensive, but has '20%' better features - GPS, airbags, impact protection e.t.c. In theory, this is 10% fall in the 'price' (Note, these are just theoretical examples to explain how hedonics could be implementd)
The problem is judging the quality of a product is very much a normative opinion. The latest mobile phone may have many more features, but how many people actually use them? It is the same with computers; a new computer may be twice as fast, but, how much does it actually increase the user experience? - I would argue much less than the manufacturers would like to admit.
Therefore, you could argue that if the BLS overestimates product improvements, the inflation rate is underestimated.
On the other hand, there are many products which actually may deteriorate in value. E.g. Food may be cheaper than 50 years ago, but, more chemicals are used in the process and many argue vegetables taste more bland. It's the same with many goods which are no longer built to last. Therefore, if goods are becoming worse quality, maybe inflation is underestimated. interesting thread here Big Picture - Hedonics
The truth is that you could make arguments both ways, but, it is illustrative of how difficult it is to measure inflation exactly. BTW, I haven't completely answered your question, I will try come back to it later.