The standard economic model says that inflation is defined as the movement of the prices of a basket of goods and services. Since this number is now tied to all sorts of things (including social security payments) it has been subject to some serious manipulation. You can play with contents of the basket, you can play with how things in the basket are weighted, or whether or not they are substituted when the price of one thing goes up (people buy more chicken when beef prices rise).
Your view of inflation depends on what YOU buy, and how often. If you buy a house every 5 years, but you buy gas every week, if gas prices rise and home prices fall, will you perceive inflation or deflation, or will it be a wash?
I don't have any answers for you! However I do have some charts that might be fun to look at.
Ever wonder why the Fed strips out "volatile energy prices" from its core inflation metric? Top right chart shows why - up to 30% moves in both directions in that series.
Food is a small part of the average budget in the US. But what would the CPI look like if all we did was buy food? Lower-left chart shows the FPO's food price index vs. movements in the CPI-Food.
Housing is accounted for in the CPI in a funny way. Homeowners basically pay themselves rent (called owner's equivalent rent) and the movement of that fictitious rent is the "housing CPI". Contrast that with the Case Shiller index and how it moved year by year. Low-right chart, see how CS10 had housing prices jumping by 20% that year, while the CPI for housing actually went down! People who owned houses were fine, but anyone starting out in the housing market during 2005 most definitely felt what the CS10 number showed, as opposed to the CPI-housing line. Perhaps the CPI-housing is why the Fed didn't see the housing bubble.