Are US Inflation Numbers Flawed? Economists Sound Alarm

The US inflation data is under scrutiny following potential flaws in the numbers shaping monetary policy

A federal hiring freeze and staffing shortages at the Bureau of Labor Statistics (BLS) have led to nearly one in three price estimates in April's Consumer Price Index (CPI) report being based on imputed guesses, the highest in five years.

This revelation, reported by The Wall Street Journal on 4 June 2025, has ignited scrutiny over how reliable these figures are, especially as the US navigates a complex economic landscape with new tariffs and shifting consumer demand.

Are these numbers trustworthy, or are they skewing the Federal Reserve's decisions?

Question Data Collection Methods

The BLS, responsible for producing the CPI, relies on extensive surveys to track price changes across goods and services.

However, staffing shortages, exacerbated by a federal hiring freeze, have forced the agency to lean heavily on imputation, estimating missing data based on assumptions.

This led to 30% of April's CPI estimates being imputed, raising concerns about their precision according to the same Wall Street Journal report.

CNBC notes that while inflation was reported at 2.3% in April, economists worry these estimates might mask true price pressures, especially with tariffs driving up costs for imported goods.

On X posts, sentiment echoes this unease, with questions being raised whether the Fed is acting on shaky data. If the foundation of inflation reporting is wobbly, how can policymakers steer the economy effectively?

Brace for Tariff-Driven Price Shocks

President Donald Trump's aggressive trade policies, including blanket tariffs of at least 10% on all trading partners and 60% on Chinese imports, are expected to fuel inflation in 2025.

Yahoo Finance cites economists like Nancy Vanden Houten, who warn that these tariffs could spark an inflationary spiral, with businesses passing higher costs to consumers.

For instance, imported goods like electronics and clothing may see price hikes of £7.50–£15 ($10.60–$20.32) per item, depending on the tariff burden.

Yet, the April CPI data showed no significant tariff impact, possibly because businesses are still depleting pre-tariff inventories.

Demand Transparent Economic Metrics

The stakes are high: flawed inflation data could mislead the Federal Reserve, which has held rates steady to combat persistent inflation above its 2% target.

CNBC also reports that core PCE inflation, the Fed's preferred gauge, hit 2.8% in February 2025, with tariffs expected to push it to 2.8% by year-end.

The BLS needs adequate funding and staffing to conduct comprehensive surveys, reducing reliance on guesswork. Public trust in economic metrics is faltering, X discussions highlight growing scepticism about government-reported figures.

Transparent and reliable data is crucial to guide decisions impacting millions of households facing rising costs for essentials like food, £2.25 ($3.05) more per grocery basket and fuel £0.80 ($0.11) per litre.

Trust in Numbers Hangs in the Balance

As the US grapples with tariff-driven price pressures and economic uncertainty, the integrity of inflation data has never been more critical.

Inaccurate numbers risk misguiding the Federal Reserve, potentially derailing efforts to stabilise prices and growth.

With £1.6 trillion ($2.1 trillion) in consumer spending at stake, the call for robust, transparent data collection grows louder.

The BLS must address staffing shortages, and policymakers must heed economists' warnings, trust in the numbers is fragile, and restoring it demands action now.

Originally published on IBTimes UK