On Friday, John Williams, the President of the New York Federal Reserve, indicated that “technical factors” probably skewed the inflation figures for November, resulting in a headline reading that was lower than it might have been.
“There were several unique or practical factors tied to their inability to gather data in October and early November. Because of this, I believe the data in some categories were influenced, which likely lowered the CPI reading by about a tenth,” Williams stated during his appearance on CNBC’s “Squawk Box.”
“It’s challenging to assess right now, but when we reach the December figures, I anticipate we’ll have a clearer understanding of how significant that distortion was, though I suspect it was somewhat reduced by these technical influences,” he continued.
The consumer price index increased at an annualized rate of 2.7% last month, according to a lagged report from the Bureau of Labor Statistics. Dow Jones economists had anticipated a CPI rise of 3.1%.
Williams remarked that the data might show a downward bias due to it being primarily collected in the latter half of November, coinciding with a period of widespread sales, and highlighted that there were also issues regarding rent and other classifications.
The New York Fed chief expressed some reassurance from the categories unaffected by those complications, noting some alleviation in price pressures in particular sectors.
“The data we’re observing is genuinely quite promising concerning CPI news. I believe it indicates an ongoing disinflationary trend we’ve been witnessing,” Williams added.
Due to the cancellation of the October CPI release, the report issued on Thursday was missing several standard data points usually found in a CPI report. The Bureau of Labor Statistics mentioned it could not retrieve data from the October survey, yet it used “nonsurvey data sources” to compile the index.
Consequently, economists may be cautious about interpreting the report as definitive proof that inflation is consistently decreasing, particularly given the lack of an October comparison. It is believed that the BLS estimated some components of the owner’s equivalent rent for the canceled month of October at zero inflation, which distorted that calculation downwards.
