Data users need clarity on numbers from the statistics ministry

livemint.com:

Earlier this year, the US bureau of labour statistics landed in an unusual controversy. An email sent to a group of ‘super users’ about methodological tweaks in inflation calculations for the month of January found its way to the press. Since the group of super users included leading investment banks and hedge funds, it raised suspicions about the agency sharing market-sensitive information with a closed group.

The agency claimed that it did not maintain any list of super users, and that the mail sent by one of its officials was an isolated ‘mistake’. A subsequent investigation by Ben Casselman and Jeanna Smialek of The New York Times (‘New questions on how a key agency shared inflation data’, 5 April) showed that the official concerned did maintain a list of super users, and had regular email correspondence with them. The official did not share any data in advance.

He simply provided contextual and methodological clarifications on the US retail inflation gauge. “Such details, though highly technical, can be of significant interest to forecasters, who compete to predict inflation figures to hundredths of a percentage point," wrote Casselman and Smialek. “Those estimates, in turn, are used by investors making bets on the huge batches of securities that are tied to inflation or interest rates." Since professional forecasters and even the Federal Reserve have been wrong on the inflation trajectory in the US in recent years, the stakes in getting inflation forecasts right have increased significantly.