(September 27 – 14:50 ET) – The low-inflation U.S. economic miracle is less miraculous than it has seemed. According to Washington Post reporter John Berry, the U.S. Bureau of Labor Statistics is set to admit a calculation error that has understated the consumer price index.
Berry reports that the BLS is set to revise the CPI upwards to correct the change. The CPI is of course closely watched by the U.S. Federal Reserve Board in its interest rate decisions.
The BLS has not yet commented on the report, but it has called a news conference for tomorrow morning to announce revisions. “The revisions to the CPI correct an error recently discovered in the software used to calculate the residential rent and owner’s equivalent rent components of the index,” says a BLS release. “Although the corrections were large enough to require re-publication, the general pattern of consumer price behavior this year was little affected.”
The story in the Post says the revision will add 0.1% to 0.3% to the existing inflation figures of 3.4% on the headline and 2.5% on the core rate. Economists do not expect this to prompt rate action, particularly in the midst of an unofficial election moratorium, but it surely fuels speculation of future hikes once the election is out of the way.
-IE Staff