The U.S. Labor Department's economic statistics arm said on Wednesday it was reducing the Consumer Price Index collection sample in areas across the country due to resource constraints, but the move should have "minimal impact" on the overall CPI data.
In a statement posted on its website, the Bureau of Labor Statistics said the sample reduction and collection suspension could, however, increase the volatility of sub-national or item-specific indexes.
"BLS makes reductions when current resources can no longer support the collection effort," the agency said. "BLS will continue to evaluate survey operations."
The agency, which also compiles the closely watched employment report, has been impacted by a hiring freeze imposed by President Donald Trumpas part of an unprecedented campaign to drastically reduce the size of government through mass layoffs and spending cuts.
The Wall Street Journal reported earlier on Wednesday that the BLS beginning in April reduced the number of businesses at which it checks prices for the benchmark CPI report, citing the hiring freeze that Trump imposed on January 20, his first day back in office.
"The CPI temporarily reduced the number of outlets and quotes it attempted to collect due to a staffing shortage in certain CPI cities," beginning in April, a BLS email to private economists and shared with the Journal read. "These procedures will be kept in place until the hiring freeze is lifted, and additional staff can be hired and trained."
The BLS post said CPI data collection in April had been suspended in one city in Nebraska and another in Utah. Collection was suspended in Buffalo, New York, in June.
"The number of imputed items and the response rates increased in April due to these actions," the agency said.
MONTHLY SNAPSHOT
CPI is among the most closely watched economic datasets published by the U.S. government, relied upon by economists, investors and policymakers for near-real-time estimates of the state of inflation. It provides a monthly snapshot of changes both to prices overall and among hundreds of separate products and services, ranging from eggs to eyeglasses and airline tickets to automobiles.
Indeed, some private economists worry the collection staff cutbacks are already hurting the quality of the data produced in the report. Concerns were raised by outside economists after the Trump administration disbanded BLS and Commerce Department advisory boards that had given the agencies advice on economic data collection and analysis.
"The federal government hiring freeze and the drive to cut funding across federal agencies may be starting to impact the quality of economic data," Omair Sharif, the president of Inflation Insights, wrote earlier on Wednesday, citing changes in how the CPI for April was constructed and noting as well the decision by the BLS to stop producing hundreds of indexes on producer prices.
"These indicators shape interest rate and tax policy, and it's not a stretch to say that they affect the lives of everyday folks. Degrading the quality of these statistics only worsens future economic outcomes," Sharif wrote.
There is a heightened focus on inflation data due to Trump's wide-ranging tariffs, which are import taxes that most economists believe will drive prices higher in the near term, at least temporarily.
