Due to a shortage of personnel, the U.S. Bureau of Labor Statistics (BLS) has been forced to cut the scope of inflation data collection since April, using a less accurate alternative method called 'differential unit interpolation' to estimate prices, leading to questions about the accuracy of inflation data. In the Consumer Price Index (CPI) for April, 29% of prices were estimated, the highest proportion in five years. The BLS has stopped collecting data in some cities, including Lincoln, Nebraska; Provo, Utah; and Buffalo, New York. Experts are concerned that this may increase the volatility of regional and category prices, although officials claim that the overall impact on inflation is 'limited.' This decline in quality coincides with the Trump administration freezing federal hiring, disbanding the Statistical Advisory Committee, and significantly cutting staff at the Department of Labor and its affiliated agencies. Some economists warn that the adjustments in BLS data sampling and processing methods pose a systemic risk to inflation readings, especially given that adjustments to federal social security, tax rate settings, bond yields, and even Federal Reserve monetary policy all rely on CPI data. Although the annual CPI growth rate for April fell to 2.3%, a four-year low, core inflation was at 2.8%, and market reactions were muted. Experts point out that considering Trump raised tariffs on China to 145% in April and repeatedly adjusted trade policies, prices in the coming months will be more uncertain, and the current 'sunny weather' may not reflect the impending inflation 'storm'.
Image source from the internet