When the issuer of those securities is the one defining the amount of inflation, that issuer has every reason to understate said amount, and the holder of the securities may still lose purchasing power.
Consider e.g. Argentina's official inflation statistics versus 3rd party estimates. The difference is not explained by Argentina being a bunch of meanies but rather the system of incentives and particularly Public Choice Theory.
USA TIPS are inflation-adjusted according to a published standard (CPI-U). One can argue that the standard itself underestimates inflation (I would probably agree), but the securities really do adjust with measured inflation. If the inflation is understated, it's at least done in a defined way. So yes, I suppose the holder of the securities would still lose purchasing power, but not in a catastrophic way. TIPS are still a decent hedge against inflation.