This article is not as strong as the headline implies. The "models" being mentioned are supply/demand models of price-setting, not the general equilibrium models that inform policy.
The Bureau of Labour Statistics is already wise to the fact that products change over time, and they implement a quality adjustment factor (https://www.bls.gov/cpi/quality-adjustment/home.htm) to mostly compensate. Something simple like adjusting the quantity of stuff in the package is so blindingly obvious it should be fully accounted for in inflation statistics.
Instead, this article (and the research work it's based on) refers to the odd phenomenon of sticky market prices. In particular (from a bit past the easily-accessible blurb of the article):
> Firms that sell thousands of different items do not offer them at thousands of different prices, but rather slot them into a dozen or two price points.
This is not what you'd expect from a textbook model of economics; there's no continuous calculation that would explain why a company should prefer to sell a dozen different shirts for $14.99 despite differences in quality or observed demand.
The research also suggests the tail wags the dog:
> Retailers, Messrs Aparicio and Rigobon suggest, seem to design products to fit their preferred price points. Given a big enough shift in market conditions, such as an increase in labour costs, firms often redesign a product to fit the price rather than tweak the price.
... which is again counterintuitive given that retailers would ordinarily _set_ the price.
Ultimately, the macroeconomic point is made best at the conclusion of the article:
> What’s more, the substitution of quality for price as firms’ main way of responding to changing market conditions weakens the case for keeping inflation low and stable. Inflation makes relative prices less informative, economists reckon, making it harder to decide what to buy and how to spend. Rather than clarity, low inflation has brought a different sort of confusion: one of shrinking chocolate bars and lost holidays.
... which also makes sense given the research finding being reported on. Retailers evidently feel they can't adjust price to reflect quality (and have to go the other way); if inflation were higher but still stable, then everyone would be forced to make these sorts of adjustments more often.