New York Fed President Williams said Friday that “technical factors” may have distorted November’s inflation numbers, making the headline number lower than usual.
“There were some special and practical factors that really related to the fact that we weren’t able to collect data in October as opposed to the first half of November, so I think that skewed the data in some categories and that pushed the CPI reading down by probably a factor of 10,” Williams said on CNBC’s “Squawk Box.”
“It’s hard to know. Once we get the December data, we’ll have some information. I think we’ll have a better sense of how distorted it was and how big the impact was, but I think it was pushed down somewhat by these technical factors,” he added.
The consumer price index rose at an annual rate of 2.7% last month, according to a delayed report from the Bureau of Labor Statistics. Economists polled by Dow Jones had expected the CPI to rise 3.1%.
Williams said the data may have a downward bias because it was collected primarily in late November, when sales were widespread, and noted there are also complexities in rent and other categories.
The New York Fed president said price pressures in certain sectors have eased and there is some comfort in categories unaffected by these issues.
“Some of the data that we’re seeing is actually quite encouraging in terms of CPI news. I think this represents a continuation of the disinflationary process that we’ve been seeing,” Williams said.
Due to the cancellation of the October CPI release, Thursday’s report was missing some of the standard data points normally included in CPI reports. The Bureau of Labor Statistics said it uses “non-survey data sources” to create the index, but cannot retroactively collect survey data from October.
As a result, given the lack of a comparison for October, economists may be wary of interpreting the report as clear evidence of a sustained downward trend in inflation. Economists believe that some of the inputs into the owner’s equivalent rent calculation for the canceled October month were estimated by the BLS to have zero inflation, skewing the calculation downward.
