The Bureau of Labor Statistics is contemplating a change in the idely followed consumer-price index that could have a big impact on how markets and policy makers interpret the latest inflation data.Wall Street and the Fed both attentively follow the core inflation index (which excludes food and energy in addition to having other shortcomings) put out by the Bureau each month. The markets hit a springboard or a precipice depending on the number. Currently, the inflation rate is given as a percentage to the first decimal place. The change reported can be figured by looking at the actual index by month. The problem is, this number is rounded as well. So conceivably a change of .25% is reported as .3%, while a nearly equivalent shift of .249% is reported as .2%, a 50% difference in the magnitude of reported inflation.
The agency, part of the Department of Labor, is considering publishing the index and its subindexes to three decimal places instead of one, an agency official said. Doing so would greatly reduce the frequency with which rounding produces a misleading inflation rate.
Fortuitously, we live in the 21st Century, at a time when extending a number derived from the prices of over 80,000 items (before rounding its decimal extension competes with pi) is easily doable. It's inexplicable that the Bureau wouldn't make this painless and informative change that first-semester business school students would know to institute ASAP.