The monetary matadors at the Federal Reserve have stared into the eyes of mild price inflation for years. They didn’t move a muscle for years and have finally twitched ever so slightly, a couple times in the last few months, with a promise of more.

It is the view of Fed Chair Janet Yellen that signs of overheating in the broader economy are “scarce.” The indispensable Grant’s Interest Rate Observer isn’t so sure and devoted its front page and then some of its March 10 issue to inflation and how it’s measured. After all, the price level is the North Star of central bank policy.

Grant’s sent its Harrison Waddill to tag along with a “government inflation scout” who was sampling prices for the Bureau of Labor Statistics (BLS) at a New York supermarket. The BLS price sleuth told Waddill, “Sometimes, an item that I’m supposed to price isn’t on the shelf when I arrive.” Remember, there is an army of PhDs waiting at the Eccles Building and other Fed forts to plug price data into their models so as to make the secret sauce that creates our prosperity.

Our man from the BLS related a story about a store no longer carrying the prepared salad he was to price, so he made the executive decision to substitute a fruit salad, and finally “found prepared prices of fruit.”

Unfortunately for our part time price picker, his substitution didn’t pass muster with the BLS brass, “not enough nuts or croutons,” they said. He was given “a list of different items (not salad) to price instead.”

Grant’s admits the BLS has a difficult job. “But we wonder about the margin for conceptual error in the processing of the statistics so carefully gathered.” Add CPI and PCE to sausage and legislation as things you don’t want to watch being made.

Ignorance is Bliss at the Federal Reserve

The Fed’s employees, themselves, are blissfully unaware of changes in the price level of things like, say, food. Danielle DiMartino Booth lists the creature comforts afforded central bank employees in Dallas in her insightful new book Fed Up. In addition to a subsidized cafeteria, there is a separate executive dining room.