Inflation is really at 10%?

So says CNBC, citing the Shadow Government Statistics newsletter.  That is, if we measured inflation today using the same methodology we used before 1980, then yes, we'd be at nearly 10% annualized.

It's not only about smoothing the volatility of food and fuel prices.  A decade ago JLM steered me to a wonderful article from the Dallas Fed that showed how dramatically prices have fallen over the last century, when you measure the cost by using hours of work needed to make a purchase rather than nominal dollars.  What's more, the quality of some stuff is getting better with no attendant price increase (iPads, for example).  Apparently the Bureau of Labor Statistics has been adjusting the CPI to take such effects into account as well.

The unfortunate result is that people feel like they are experiencing much more inflation than the government claims they should experience.  Is it a problem with my high-priced locality, my spending on inflation-prone goods, or is the government just out of touch once again?

I'm curious about the cumulative effect of these changes to CPI measurement, and also the interplay with TIPS.  Is it a coincidence that, now that TIPS are generally available, the new definition of inflation gives us lower numbers than it once did?