‘Swiss Cheese’ CPI Report Raises Doubts About US Inflation Data

c9hyp(hjfjt4nw3do{gn0mj2_media_dl_1.png Bureau of Labor Statistics, BlooArticle content(Bloomberg) — After long-awaited government data showed underlying US inflation cooled to a four-year low in November, economists agreed on at least this much: something was off.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentIn a report fouled by the record-long government shutdown, inflation in several categories that had long been stubborn seemed to nearly evaporate. Chief among those were shelter costs, which make up about a third of the consumer price index, but other categories like airfares and apparel notably declined.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentBecause of the shutdown, the Bureau of Labor Statistics couldn’t collect prices throughout October and started sampling later than usual in November. The so-called core CPI, which excludes food and energy, increased 2.6% in November from a year ago — the slowest pace since 2021 and below all estimates in a Bloomberg survey of economists.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentSeveral forecasters pointed to the absence of that October data — which resulted in pages of blank spaces in the widely watched report — as effectively the same as assuming no price growth for the month. That culminated in sizable downward pressure on the November inflation figures, they said. Some noted the shortened collection period could have also skewed the data. Article contentThe titles of their analyses were telling: “Lost in Translation,” according to TD Securities. “Delayed and Patchy,” per William Blair, and a “Swiss Cheese CPI report” from EY-Parthenon.Article content“This one-of-a-kind report produced anomaly after anomaly, almost all pointing in the same direction,” Stephen Stanley, chief US economist at Santander US Capital Markets LLC, said in a note. “I think it would be unwise to dismiss the results entirely, but I also believe it would be rash to take them at face value.”Article contentArticle contentThe shutdown limited the BLS’s ability to calculate standard month-over-month price index values, so it mostly observed changes from September to November instead. In FAQs and other supporting documents published the day before the report, the agency forewarned that some the data may not be totally trustworthy.Article content“If bimonthly CPI data are volatile, then less confidence should be placed in estimates for the missing months,” BLS said Wednesday in a document explaining how to approximate missing data points.Article contentHousing ComponentsArticle contentThe biggest inconsistencies compared with more recent trends were in key housing categories, which have been a main driver of inflation in recent years. Some economists pointed out that a shockingly small 0.06% increase in primary rents on average over the two months, and a 0.14% average rise in owners’ equivalent rent, would only be possible if BLS essentially kept the October index values the same as a month earlier. That would represent no increase from September.Article content“There is no world in which this was a good idea, but here we are,” said Omair Sharif, president of Inflation Insights LLC.Trending Philip Cross: The sad story of Justin Trudeau’s 'youthful idiots' FP Comment Tax Court overturns CRA decision to deny bitcoin loss writeoff Taxes Posthaste: Here's where home prices plunged the most in tough year for Canada's housing market News Trump official signals support for trade deal with Canada, Mexico Economy Welcome to the K-shaped economy: Canadians look back on a 'brutal,' 'great' year in Trump's trade war Economy Article contentThe month-over-month changes for key housing categories will largely be sorted with the release of the December CPI — though they may look “high,” Sharif said. But the annual changes will likely be impacted for longer.Article contentThat’s because BLS samples several panels of households about their rents on a rolling six-month basis, so some of the errant October values may not fall out of the index until April.Article contentDespite the idiosyncrasies, several economists maintained that inflation is cooling, just perhaps not as much as Thursday’s report would suggest.Article content“Through the noise, we believe inflation is slowing on trend, even if today’s reading overstates the magnitude of the slowdown,” Wells Fargo & Co. economists said in a note. Article contentThe title of their analysis was more direct: “Take It with the Entire Salt Shaker.”Article content—With assistance from Reade Pickert and Julia Fanzeres.Article contentShare this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Philip Cross: The sad story of Justin Trudeau’s 'youthful idiots' FP Comment Tax Court overturns CRA decision to deny bitcoin loss writeoff Taxes Posthaste: Here's where home prices plunged the most in tough year for Canada's housing market News Trump official signals support for trade deal with Canada, Mexico Economy Welcome to the K-shaped economy: Canadians look back on a 'brutal,' 'great' year in Trump's trade war Economy