Tags: inflation | Fed | rents | doubt

Accuracy of CPI in Doubt Because of Shutdown, Cleveland Fed Says

Friday, 18 Oct 2013 12:01 PM

 

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The accuracy of U.S. inflation data will be compromised for as long as seven months because of the 16-day partial federal shutdown, according to a report by the Federal Reserve Bank of Cleveland.

The Labor Department’s consumer-price data for October, currently scheduled to be released on Nov. 15, “will be subject to significant error,” Randal Verbrugge, a senior economist, and Sara Millington, an analyst, wrote in an Oct. 17 report on the Cleveland Fed’s website. The agencies’ inability to collect data in the first half of this month will “affect the accuracy of these statistics for months to come,” they said.

The Bureau of Labor statistics has hundreds of part-time staff in the field collecting information on the cost of about 83,300 items on a daily basis, everything from food to automobiles. Those employees weren’t able to go out in the first half of the month because of the lapse in government appropriations, which means the October report will only reflect information from Oct. 17 onward.

“The fact that many prices will not be collected in October will have repercussions later on,” Verbrugge and Millington wrote. “In fact, these repercussions do not end until May 2014.”

That’s because the prices of some items are not collected monthly, they said. The costs of some goods are collected every other month and rents are tabulated only every six months. That means any error introduced in the rental portion of the statistics won’t be reversed until the figures for March 2014 are released the following month, according to Verbrugge and Millington.

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