New York Federal Reserve President John Williams said Friday that “technical factors” likely distorted November’s inflation data, pushing the headline reading lower than it otherwise would have been.
“There were some special factors or practical factors that really are related to the fact that they weren’t able to collect data in October and not in the first half of November. And because of that, I think the data were distorted in some of the categories, and that pushed down the CPI reading, probably by a tenth or so,” Williams said on CNBC’s “Squawk Box.”
“It’s hard to know, we’ll get some when we’ll get to December data, I think we’ll get a better reading of how much that distortion, how big the effect was, but I do think that that was pushed down a bit by these technical factors,” he added.
The consumer price index rose at a 2.7% annualized rate last month, a delayed report from the Bureau of Labor Statistics showed. Economists polled by Dow Jones expected the CPI to have risen 3.1%.
Williams said the data may have a downward bias because it was collected mainly in the second half of November, when sales were widespread, and noted there were also complications with rent and other categories.
The New York Fed president said he took some comfort from categories not affected by those issues, seeing cooling price pressures in certain sectors.
“Some of the data that we’re seeing is actually pretty encouraging in the sense of the CPI news. and I think it represents a continuation of the disinflationary process we’ve seen,” Williams said.
Because the October CPI release was canceled, Thursday’s report lacked several of the standard data points typically included in a CPI report. The Bureau of Labor Statistics said it could not go back and collect October survey data, though it relied on “nonsurvey data sources” to construct the index.
As a result, economists may be cautious about interpreting the report as clear evidence that inflation is on a sustained downward path, given the absence of an October comparison. Economists believe some some inputs to the owners’ equivalent rent calculation for the canceled October month were estimated by the BLS to have zero inflation, distorting that calculation downward.
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