Why Smart Investors No Longer Trust US CPI

Economists warn that the growing reliance on imputed data in the US Consumer Price Index (CPI) is eroding confidence in a critical benchmark for Federal Reserve policy and investor expectations. The share of estimated prices in the CPI surged to 36% in August 2025—the highest level since records began—up from 32% in July, according to Bureau of Labor Statistics (BLS) methodology reviewed by The Kobeissi Letter.

Traditionally, the CPI derives from 90,000 monthly price quotes across 200 goods and services categories, with imputation historically limited to 10% of the index. Since mid-2024, however, estimation has exceeded 30%, driven by pandemic-era data gaps, shifting consumption patterns, and volatility in housing and healthcare pricing. "When a third of the Fed's compass is guesswork, markets navigate blind," remarked Apollo Global Management's chief economist.

The erosion of trust coincides with heightened scrutiny of Fed policy decisions. Market participants now question whether rate trajectories reflect economic reality or statistical artifacts—a dilemma with particular implications for inflation-sensitive assets like Bitcoin and Ethereum.