Trust these numbers? Economists see a lot of flaws in delayed CPI report showing downward inflation

The recent release of the consumer price report for November came as a surprise to many economists. The Bureau of Labor Statistics reported that the consumer price index had an annual inflation rate of 2.7% last month, while core CPI was even lower at 2.6%. This was below the expectations of economists, who had predicted higher rates.

One key issue that economists highlighted was the owners’ equivalent rent (OER) subset in the data. It was noted that the price changes for OER in October appeared to have been set to zero, which could have a lingering impact on future months. The methodological assumptions made by the BLS were not clear to economists, leading to speculation about the accuracy of the data.

There were also concerns raised about downward pressure on certain goods categories due to holiday discounting during the data collection period. Despite the initial market reaction to the lower-than-expected inflation numbers, some analysts believe that the Fed will not heavily weigh this reading in its decision-making process.

Overall, the November inflation report was viewed as “noisy” and difficult to draw strong conclusions from. Economists are waiting to see if there will be a reacceleration in December or if the technical factors that influenced the November data will persist. The market reaction to the report was mixed, with stocks initially jumping but later easing off their highs as the trading day continued.

It is important to note that the data release was delayed due to the U.S. government shutdown, which also impacted the cancellation of the October data. The BLS had to make certain assumptions about the prior month’s inflation levels, leading to uncertainty among economists about the accuracy of the November report.

In conclusion, while the November inflation report may have raised some eyebrows, economists are cautiously optimistic about future trends and are waiting for more data to make informed decisions. The impact of the methodological assumptions made by the BLS and the holiday discounting on certain goods categories will be closely monitored in the coming months.