CPI data provided 'downwardly biased view of inflation,' says EY-Parthenon's Daco

Core Viewpoint - The report on inflation shows a downward bias due to the Bureau of Labor Statistics (BLS) methodology, particularly the carry forward methodology, which uses previous month's data when current data is unavailable [2][4]. Inflation Dynamics - The BLS's carry forward methodology results in lower inflation readings, particularly affecting one-third of cities not surveyed monthly, leading to a biased lower inflation reading [3][5]. - The low inflation numbers observed in October may influence inflation trends into 2026, with shelter costs disinflating faster than previously expected [5]. Economic Implications - There is a potential for GDP growth to exceed 4%, driven by productivity gains and a narrowing trade deficit, despite flat employment since April [9]. - The productivity boom, particularly related to AI, is contributing to economic growth, which may not align with traditional employment metrics [9].