Selection Bias in Reporting Inflation

From Bloomberg’s Caroline Baum,

When statisticians use the term "sample selection bias," they are referring to a flaw in the selection process that influences the outcome of a study and produces distorted results…

When energy prices boost headline inflation in any given month, the commentary focuses on the usually tame core to support the conclusion that there is no inflation. When energy prices depress the CPI, somehow the focus shifts to the headline CPI -- once again to show there is no inflation. That's what made me think of selection bias, at least in terms of what we choose to see.

The Federal Reserve has an implicit inflation target of 1.5 percent to 2 percent. With the CPI up 3.4 percent in the past year and the core up 2.2 percent and climbing, policymakers better hope those inflation expectations are well anchored.

In my earlier post, I wrote

Statistics can be manipulated to suit one’s dogmatic perspective.

I might add, statistics can be manipulated or interpreted to tailor fit the interests of political authorities.