Economists question the reliability of BLS inflation data

The accuracy of US inflation data is under scrutiny as staffing shortages at the Bureau of Labor Statistics (BLS) have economists concerned.

After President Donald Trump took office, he implemented a hiring freeze for federal workers. The move forced BLS to resort to less accurate methods.

How does BLS collect data?
The bureau physically sends employees to businesses to check the prices of products. This data is then used to calculate the consumer price index (CPI).

Since the BLS has fewer employees this year, it couldn’t collect all the data for last month’s inflation report. Budget cuts exacerbated the situation, and the bureau was forced to halt data collection in cities such as Lincoln and Buffalo. So, it used “different-cell imputations”—a method where statisticians base their guess on less comparable items or use prices from other regions.

In April, 29% of price estimates relied on this method, nearly double the recent average.

Economists are now questioning the accuracy of the inflation data as well as its long-term implications.

Why it matters for Americans
Inflation figures influence Social Security payouts, tax brackets, and $2 trillion in federal bond payments.

The Federal Reserve uses the figure to make decisions on interest rates, while investors use the data for financial decisions. Economists stress that no intentional manipulation is suspected, but the drop in data quality adds uncertainty at a critical time.