NY Fed President Williams says some ‘technical factors’ distorted November’s CPI reading downward
New York Federal Reserve President John Williams said Friday that “technical factors” likely distorted November inflation data and pushed the headline reading lower than it otherwise would have been.
“There were some specific factors or practical factors that really had to do with their inability to collect data in October and the first half of November. And so I think the data was skewed in some categories, and that pushed the CPI reading down probably by a tenth,” Williams said on CNBC’s “Squawk Box.”
“It’s hard to know, we’ll get some information when we get the December data, I think we’ll get a better read on how much of that disruption there is, how big the impact is, but I think that’s being pushed down a little bit by technical factors,” he added.
The consumer price index rose 2.7 percent on an annualized basis last month, according to a delayed report from the Bureau of Labor Statistics. Economists participating in the Dow Jones survey expected the CPI to increase by 3.1%.
Williams said there may be a downward trend because the data was collected mostly in the second half of November, when sales were prevalent, and he noted there were also problems in rent and other categories.
The New York Fed President said he saw price pressures easing in certain categories and took some relief from categories that were not affected by these problems.
“Some of the data we’ve seen is quite encouraging in terms of CPI news, and I think it represents a continuation of the disinflation process that we’ve been seeing,” Williams said.
Because the October CPI release was canceled, Thursday’s report was missing many 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, although it relied on “non-survey data sources” to create 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 that there is no October comparison. Economists believe that some of the input into the property owners’ equivalent rent calculation for the canceled month of October was predicted by the BLS to have zero inflation, biasing that calculation downwards.
