Before the Bureau of Labor Statistics (BLS) releases the official consumer price index (CPI) report for January, this is your reminder that the federal agency altered how it measures inflation.
Here is what the BLS previously announced:
“Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data.”
It also plans to alter the “owner’s equivalent rent (OER) unit weight.”
Here is what the BLS noted:
“Beginning with January 2023 data, BLS plans to adjust the weighting method for Owner’s Equivalent Rent (OER) in the CPI. The new method will use neighborhood level information on housing structure types to weight OER’s unit sample observations. BLS will continue to sample and weight housing units to be geographically representative. In some neighborhoods, detached houses are underrepresented in survey responses so additional unit weight will be given to underrepresented detached houses in the OER index sample.”
Whether this will boost or reduce the CPI remains to be seen.
That said, the Federal Reserve Bank of Cleveland anticipates that the January CPI will be stuck at 6.5 percent and the core CPI will come in at 5.6 percent.
On a month-over-month basis, the CPI is expected to climb by 0.7 percent and the core inflation rate is projected to increase by 0.6 percent.
Leave a Comment