U.S. May Change Reporting of CPI

The Labor Department, in an effort to more accurately report every monthly inflation wiggle, is considering changing the way it reports the consumer price index.

The government’s broadest gauge of the cost of goods and services may be reported out to three decimal places rather than just one, said Patrick Jackman, a senior economist at the Bureau of Labor Statistics. Readings including the headline number and the core index, which measures prices excluding food and fuel, may be modified as early as next year, he said.

A change as small as a tenth of a percentage point in core prices may mean the difference between inflation holding within the Federal Reserve’s preferred range and an unwelcome acceleration that would prompt increases in interest rates. Unexpected readings often roil stock and bond markets as investors’ perceptions shift on what the central bank is likely to do next.

“We are going to give them a little more information and let the markets do what they want,” Jackman said. “It’s the one-month change that people are really concerned about here.”

Core prices rose 0.3% in June -- the most recent month for which data are available -- exceeding the 0.2% median forecast of economists surveyed by Bloomberg News, the Labor Department said July 19.

The report pushed yields on two- and 10-year Treasury securities to two-week highs. Later that day, yields fell the most in six weeks after Fed Chairman Ben S. Bernanke said in testimony before Congress that the economy was going through a “moderation” in growth.

Such changes in methodology by the Labor Department usually take place with the January inflation data that are posted in February, Jackman said. The Wall Street Journal first reported the proposal Monday.

The change would only affect the way the government reports the index level, not the monthly percentage change, Jackman said. Investors would still need to pull out their own calculators to figure the percentage changes carried out more than one decimal place.

Although it currently has some figures going out as far as 16 decimal places, the Labor Department rounds off the index to one decimal place to calculate percentage changes.