US inflation is running hot, so why not change the way it is measured?

July 7, 2026 — 12:01pm

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The US Bureau of Economic Analysis doesn’t like the answers to the questions it is asking of inflation data it collects, so it’s changing the questions.

Not for the first time, the bureau (the BEA), which produces America’s key economic data, is planning to revise its methodology in a way that will reduce the published inflation rate that, for more than 25 years, has been the key number the US Federal Reserve Board has focused on in deciding monetary policy.

In January, without any public disclosure of the change, the bureau made a change to the way it calculates legal services costs to exclude a sudden spike in prices. The change may have shaved about 10 basis points (a tenth of a percentage point) off the published Personal Consumption Expenditures (PCE) Index that the Fed favours.

Late last month, the BEA announced changes it plans to make to the data in September, shifting the sources of data used to calculate the contributions of portfolio management fees and investment advice services, legal services and computer software and services.

Coincidentally, or otherwise, two of those three categories – portfolio management services and computer software and accessories – just happen to be two of the four inputs to the PCE data that have contributed most to PCE inflation over the past year.

The most recent headline PCE number, for May, showed inflation running at 4.1 per cent year-on-year. “Core” PCE, which excludes volatile food and energy prices, rose 0.3 percentage points between April and May and was 3.4 per cent year-on-year.

The BEA has opened itself to criticism that it is manipulating the data.

Had the BEA’s changes been made, it is estimated that it would have knocked 20........

© Brisbane Times